Sammy has a drone that he values at $1,500. Dean values the same drone at $2,000. Sammy decides to sell the drone to Dean for $1,800. If the government imposes a $250 tax on the sale of drones,
A) Sammy and Dean would not be able to complete the transaction.
B) Sammy and Dean would still be able to complete the transaction.
C) the tax would cause a deadweight loss of $500.
D) Both A and C are correct.
B
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Suppose that your public library charges a fixed monthly membership fee of $12. Members are allowed to check out as many books as they want under this plan. The average member checks out 4 books per month
Suppose that your public library changes its policy. Now each book costs $3 to check out but there is no longer a monthly membership fee. What effect do you think the new policy will have on the total number of books checked out from your library each month? The new policy is likely to ______the number of books checked out because ________. A) leave unchanged; members have already shown that they are willing to pay $12 to check out 4 books per month B) leave unchanged; the average cost of the library service is the same under both plans C) reduce; the marginal benefit of checking out books is now lower under the new policy D) reduce; the marginal cost of checking out books is now higher under the new policy E) increase; the average benefit of checking out more than 4 books is now higher under the new policy
How can we separate the cost of the electricity that generates the heat from a light bulb and the cost of the electricity that generates that same bulb's light?
A) By comparing the wattage of the bulb with the change in air temperature B) By distinguishing sunk costs from marginal costs C) By dividing the total cost in two D) We cannot do it in any defensible way.