Question

The number of seats at hard rock stadium is fixed at 70,000. Suppose the team raises the price of a ticket from $30, at which 70,000 are sold, to $40, and it sells 60,000 tickets. The price change would cause a change in consumer surplus of?

Answer 1

The correct answer is "(B) -$700,000; $0; $0".

Explanation:

The tax caused a change in the consumer surplus of $-700000, a change in the producer surplus of $0, and a deadweight loss of $0.

The change in consumer surplus is due to the $ 10 increase lost by consumers (10 x 70000 = 70000).

The rest does not vary because management decided to raise the price of the product, instead of bearing the tax.