Suppose Darby Values a Certain Smart Phone at $400

question 476

Multiple Choice

Suppose Darby values a certain smart phone at $400. Jake values the same smart phone at $300. The pre-tax price of this smart phone is $250. The government imposes a tax of $75 on each smart phone, and the price rises to $325. The deadweight loss from the tax is

• A) $150.
• B) $50.
• C) $0.
• D) $100.

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