Question

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 12-2. 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?

Answer 1

$5.

Explanation:

Bob and Lisa have estimated a total value of $17.

The movie tickets are actually $6 each.

$12 for two tickets.

estimated value - actual value = consumer surplus.

$17 - $12= $5