Answer to Question #18957 in Microeconomics for achal

Question

suppose sara values her apartment to be painted at $500. the cost of her apartment of getting painted is $400.
a.) calculate her consumer surplus
b.) if a tax of $60 is imposed on the cost, wht will be the consumer surplus after tax?
c.) wht size of tax will prevent Sara from having her apatment?

Answer 1

a) consumer surplus =$500-$400 = $100
b) consumer surplus = $500-$400-$60 = $40
c) if tax is more than $100 Sara shouldn't having her apartment pained,
because she won't get consumer surplus