If the Tax on a Good Is Increased from $0

question 403

Multiple Choice

If the tax on a good is increased from $0.15 per unit to $0.60 per unit,the deadweight loss from the tax

• A) remains constant.
• B) increases by a factor of 4.
• C) increases by a factor of 9.
• D) increases by a factor of 16.

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Definitions:

Consummatory

Relating to the completion of an action or process, such as the act of consuming food or drink.

Appetitive

Refers to behaviors or processes associated with seeking out and approaching positive or desired stimuli.

Fixed Patterns

A term that refers to repeatable and predictable behaviors or sequences observed in natural or designed systems.

Taxes

Movements or orientations of an organism in response to external stimuli.