Scenario 12-3
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 12-3.Suppose the government levies a tax of $1 on each movie ticket and that,as a result,the price of a movie ticket increases to $6.00.If Bob and Lisa both purchase a movie ticket,what is total consumer surplus for Bob and Lisa?
A) $0.00
B) $0.50
C) $5.00
D) $6.00

Question

Quizplus · Accepted Answer

Before the tax, Bob's consumer surplus was $5 ($10 - $5) and Lisa's consumer surplus was $2 ($7 - $5). After the tax, Bob's consumer surplus is $4 ($10 - $6) and Lisa's consumer surplus is $1 ($7 - $6). The total consumer surplus is the sum of individual consumer surpluses, which is: $4 + $1 = $5. Therefore, the correct answer is C.

Scenario 12-3 Suppose That Bob Places a Value of $10 on a on a Movie