Scenario 12-2
Suppose that Bob places a value of $10 on a movie ticket and that Lisa places a value of $7 on a movie ticket. In addition, suppose the price of a movie ticket is $5.
-Refer to Scenario 12-2. Suppose the government levies a tax of $1 on a movie ticket and that, as a result, the price of a movie ticket increases to $6. If Bob and Lisa both purchase a movie ticket, what is the deadweight loss from the tax?
A)$0
B)$1
C)$2
D)$3

Question

Quizplus · Accepted Answer

The deadweight loss is $0 because both Bob and Lisa still purchase the ticket even after the tax, meaning there is no reduction in the quantity of tickets sold.

Scenario 12-2 Suppose That Bob Places a Value of $10 on a on a Movie