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Athos, Porthos, and Aramis Each Like to Take Fencing Lessons

Question 175

Multiple Choice

Athos, Porthos, and Aramis each like to take fencing lessons. The price of a fencing lesson is $10. Athos values a lesson at $17, Porthos at $15, and Aramis at $12. Suppose that if the government taxes fencing lessons at $3 each, the price will rise to $13. A consequence of the tax is that consumer surplus shrinks by


A) $3 and tax revenues increase by $9, so there is a deadweight loss of $3.
B) $6 and tax revenues increase by $9, so there is no deadweight loss.
C) $9 and tax revenues increase by $6, so there is no deadweight loss.
D) $9 and tax revenues increase by $6, so there is a deadweight loss of $3.

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