Figure 8-7 the Vertical Distance Between Points a and B Represents the Represents

question 95

Multiple Choice

Figure 8-7
The vertical distance between points A and B represents the original tax.
-Refer to Figure 8-7. If the government changed the per-unit tax from $5.00 to $2.50, then the price paid by buyers would be $7.50, the price received by sellers would be $5, and the quantity sold in the market would be 1.5 units. Compared to the original tax rate, this lower tax rate would

• A)increase government revenue and increase the deadweight loss from the tax.
• B)increase government revenue and decrease the deadweight loss from the tax.
• C)decrease government revenue and increase the deadweight loss from the tax.
• D)decrease government revenue and decrease the deadweight loss from the tax.