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Imposition of a tax

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Reference no: EM131396108

Adrianne and Joanna love watching plays on Broadway. Adrianne values a play at $85, and Joanna values it as $82. When the price of tickets increased from $80 to $83 following the imposition of a tax, Joanna stopped watching plays on Broadway, while Adrianne continued to buy tickets. Identify the correct statement.

  • The decrease in Adrianne's consumer surplus is equal to the deadweight loss.

  • Total consumer surplus decreased by less than the tax revenue.

  • The decrease in Adrianne's surplus is equal to the tax revenue.

  • The deadweight loss is $3.

Reference no: EM131396108

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