In Which of the Following Instances Would the Deadweight Loss

question 33

Multiple Choice

In which of the following instances would the deadweight loss of the tax on cartons of cigarettes increase by a factor of 9?

• A)The tax on cartons of cigarettes increases from $10 to $11.11.
• B)The tax on cartons of cigarettes increases from $10 to $20.
• C)The tax on cartons of cigarettes increases from $10 to $30.
• D)The tax on cartons of cigarettes increases from $10 to $90.

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Definitions:

Market Price

Market price is the current price at which a security or commodity can be bought or sold in a public market.

Security

A financial instrument representing an ownership position in a publicly-traded corporation (stock), a creditor relationship with a governmental body or a corporation (bond), or rights to ownership as represented by an option.

Direct Private Long-term Debt Financing

A funding method where businesses borrow money directly from private investors, bypassing traditional bank loans, usually for a period longer than one year.

Public Issues

The offering of securities by a company to the public in order to raise capital.