Which of the Following Would Likely Have the Smallest Deadweight

question 52

Multiple Choice

Which of the following would likely have the smallest deadweight loss relative to the tax revenue?

• A)a head tax (that is,a tax everyone must pay regardless of what one does or buys)
• B)an income tax
• C)a tax on compact discs
• D)a tax on caviar

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Definitions:

Persistent Surplus

A situation where the supply of a good consistently exceeds the demand for it, often leading to a drop in prices.

Quota Rent

The earnings that accrue to the licensee from the difference between the domestic price and the world price of an imported good when imports are limited by a quota.

Government Imposes

Actions taken by a government to enforce regulations, taxes, or penalties on citizens and businesses.

Shrimp Market

The market or industry segment concerning the buying, selling, and trading of shrimp as a commodity or food product.