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:

Simultaneous Game

A simultaneous game is a type of game in game theory where all players make their decisions or moves at the same time without knowledge of the others' choices.

Payoff Matrix

A strategic analysis tool used in decision theory and game theory that shows the potential outcomes and payoffs from different decisions made by two or more players.

First-Mover Advantage

The competitive edge that a company gains by being the first to market with a product or service.

Extensive Form

A representation of a game that displays the sequence of choices available to players and the outcomes achieved from these choices.