Athos, Porthos,and Aramis each like to take fencing lessons. The price of a fencing lesson is $10. Athos values a fencing lesson at $15, Porthos at $13, and Aramis at $11. Suppose that if the government taxes fencing lessons at 50 cents each, the price rises to $10.50. A consequence of the tax is that consumer surplus shrinks by
A)$1.50 and tax revenues increase by $1.50, so there is no deadweight loss.
B)$9.00 and tax revenues increase by $1.50, so there is a deadweight loss of $7.50.
C)$7.50 and tax revenues increase by $7.50, so there is no deadweight loss.
D)$7.50 and tax revenues increase by $1.50, so there is a deadweight loss of $6.

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The Answer of Athos, Porthos,and Aramis each like to take fencing lessons. The price of a fencing lesson is $10. Athos values a fencing lesson at $15, Porthos at $13, and Aramis at $11. Suppose that if the government taxes fencing lessons at 50 cents each, the price rises to $10.50. A consequence of the tax is that consumer surplus shrinks by
A)$1.50 and tax revenues increase by $1.50, so there is no deadweight loss.
B)$9.00 and tax revenues increase by $1.50, so there is a deadweight loss of $7.50.
C)$7.50 and tax revenues increase by $7.50, so there is no deadweight loss.
D)$7.50 and tax revenues increase by $1.50, so there is a deadweight loss of $6.

Athos, Porthos,and Aramis Each Like to Take Fencing Lessons