Table 12-1
-Refer to Table 12-1. Assume that the price of a weekend ski pass is $45 and that the price reflects the actual unit cost of providing a weekend of skiing. Suppose the government imposes a tax of $12 on skiing, which raises the price of a weekend ski pass to $57. What is the value of the surplus that accrues to all four skiers from their weekend trip?
A)$41.
B)$95.
C)$144.
D)$185.

Question

Table 12-1 
-Refer to Table 12-1. Assume that the price of a weekend ski pass is $45 and that the price reflects the actual unit cost of providing a weekend of skiing. Suppose the government imposes a tax of $12 on skiing, which raises the price of a weekend ski pass to $57. What is the value of the surplus that accrues to all four skiers from their weekend trip?
A)$41. 
B)$95. 
C)$144. 
D)$185.

Quizplus · Accepted Answer

Before the tax, the total consumer surplus is the sum of the individual surpluses of the four skiers, which is equal to: 
Skier A: (½)($90 - $45) = $22.50 
Skier B: (½)($60 - $45) = $7.50 
Skier C: (½)($50 - $45) = $2.50 
Skier D: (½)($30 - $45) = -$7.50 
Total consumer surplus = $25.00

After the tax, the price of a ski pass is $57, so the individual surpluses change as follows: 
Skier A: (½)($90 - $57) = $16.50 
Skier B: (½)($60 - $57) = $1.50 
Skier C: (½)($50 - $57) = -$3.50 
Skier D: (½)($30 - $57) = -$13.50 
Total consumer surplus = $1.00

Therefore, the value of the surplus that accrues to all four skiers from their weekend trip is: 
$25.00 - $1.00 = $24.00

Since the tax revenue collected by the government is $12 x 4 = $48, the deadweight loss is $72 ($144 - $48). Thus, the best choice is C, $144.

Table 12-1 -Refer to Table 12-1. Assume That the Price of a Price