Suppose a Tax of $0

question 343

Multiple Choice

Suppose a tax of $0.10 per unit on a good creates a deadweight loss of $100.If the tax is increased to $0.30 per unit,the deadweight loss from the new tax would be

• A) $200.
• B) $300.
• C) $900.
• D) $9,000.

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Definitions:

Taxed

Subject to taxation by governmental authority, involving the imposition of financial charges on individual or corporate income, property, goods, services, or transactions.

Partnership

A business organization where two or more individuals manage and operate a business in accordance with the terms and objectives set out in a Partnership Agreement.

Parent-Subsidiary Corporations

A relationship between two companies where one, the parent, controls the other, the subsidiary.

Consolidated Tax Return

A tax return that combines the tax liability of all subsidiary companies with that of the parent company, simplifying tax filing for corporate groups.