Athos, Porthos, and Aramis each like to take fencing lessons. The price of a fencing lesson is $10. Athos values a lesson at $17 Porthos at $15 and Aramis at $12. Suppose that the government taxes fencing lessons at $3 each, the price will rise to $13 a consequence of the tax is that consumer surplus shrinks by a. $9 and tax revenue increases by $6, so there is a deadweight loss of $3 b. $3 and tax revenue increases by $9, so there is a deadweight loss of $3 c. $6 and tax revenue increase by $9, so there is no deadweight loss d. $9 and tax revenue increase by $6,
Athos, Porthos, and Aramis each like to take fencing lessons. The price of a fencing lesson is $10. Athos values a lesson at $17 Porthos at $15 and Aramis at $12. Suppose that the government taxes fencing lessons at $3 each, the price will rise to $13 a consequence of the tax is that consumer surplus shrinks by a. $9 and tax revenue increases by $6, so there is a deadweight loss of $3 b. $3 and tax revenue increases by $9, so there is a deadweight loss of $3 c. $6 and tax revenue increase by $9, so there is no deadweight loss d. $9 and tax revenue increase by $6,
Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN:9781285165875
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter8: Application: The Cost Of Taxation
Section: Chapter Questions
Problem 8PA
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Athos, Porthos, and Aramis each like to take fencing lessons. The price of a fencing lesson is $10. Athos values a lesson at $17 Porthos at $15 and Aramis at $12. Suppose that the government taxes fencing lessons at $3 each, the price will rise to $13 a consequence of the tax is that
a. $9 and tax revenue increases by $6, so there is a
b. $3 and tax revenue increases by $9, so there is a deadweight loss of $3
c. $6 and tax revenue increase by $9, so there is no deadweight loss
d. $9 and tax revenue increase by $6,
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