Suppose a Tax of $0

question 45

Multiple Choice

Suppose a tax of $0.50 per unit on a good creates a deadweight loss of $100.If the tax is increased to $2.50 per unit,the deadweight loss from the new tax would be

• A)$200.
• B)$250.
• C)$500.
• D)$2,500.

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Definitions:

Productivity

The measure of the efficiency of production, often evaluated as the ratio of outputs to inputs in a manufacturing or service process.

Double-Declining-Balance

An accelerated method of depreciation calculating depreciation at twice the rate of the straight-line depreciation method.

Salvage Value

The assessed worth of an asset at the expiration of its life of usefulness.

Depreciation Expense

The organized spreading of a tangible asset's expense over the duration of its utility.