Economic Analysis of Social Issues 1st Edition by Alan Grant

Exercise 7

In problem, if government imposed a $300 tax on the sale of droids, ________.
A) Luke and Leia would not be able to complete a bargain
B) Luke and Leia would still be able to complete a bargain
C) The tax would cause a deadweight loss of $250
D) Both (a) and (c) are true.
Problem:
Luke has a droid that he values at $500. Leia values the same droid at $750. Luke decides to sell the droid to Leia for $650. What is the total cooperative surplus gained as a result of this trade?
A) $250
B) $150
C) $100
D) $50