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Each day, Alice is willing to pay up to $20 for a first cup of coffee, up to $18 for a second, and up to
Each day, Alice is willing to pay up to $20 for a first cup of coffee, up to $18 for a second, and up to $15 for a third.
Each day, it costs Bob $11 to produce a first cup of coffee, $13 to produce a second, and $15 to produce a third.
Each day, Alice buys three cups of coffee from Bob for $15 each.
One day, the government imposes a sales tax of $9 per cup of coffee.
With the new tax in place, how many cups does Alice buy from Bob each day?
At what price?
What is the amount of the deadweight loss due to the tax?
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