Question
Suppose Roger and Regina receive great satisfaction from their consumption of cheesecake. Regina wou purchase only one slice and would pay up to $8 for
Suppose Roger and Regina receive great satisfaction from their consumption of cheesecake. Regina wou purchase only one slice and would pay up to $8 for it. Roger would be willing to pay $11 for his first slice, $9 for second slice, and $5 for his third slice. The current market price is $5 per slice. Assume that the government places a $4 tax on each slice of cheesecake equilibrium price is $9. How much tax revenue will be generated from sales to Regina and Roger?
a. Zero
b. $8
c. $4
d. $12
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Principles of Economics
Authors: Robert Frank, Ben Bernanke
5th edition
73511404, 978-0073511405
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