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:

Sugar

A sweet-tasting soluble carbohydrate obtained primarily from sugarcane and sugar beet, widely used as a sweetener in food and drinks.

Surplus Production

The situation where the quantity of goods produced exceeds the quantity of goods consumed.

Government Policies

Decisions or plans made by a government that influence the behavior of society or sectors of the economy.

Farm Products

Agricultural goods produced through farming activities, including crops, livestock, and other raw materials.