Use the following to answer question:
-(Figure and Table: The Market for Taxi Rides)Use Figure and Table: The Market for Taxi Rides.The figure represents a competitive market for taxi rides.If the government imposes an excise tax of $2 per ride (causing the supply curve to shift upward by that amount),then the government will collect tax revenues of _____,BUT the tax will cause a _____ deadweight loss to society.

Question

Use the following to answer question: 
-(Figure and Table: The Market for Taxi Rides)Use Figure and Table: The Market for Taxi Rides.The figure represents a competitive market for taxi rides.If the government imposes an excise tax of $2 per ride (causing the supply curve to shift upward by that amount),then the government will collect tax revenues of _____,BUT the tax will cause a _____ deadweight loss to society.

Quizplus · Accepted Answer

The government collects tax revenues by multiplying the tax per ride ($2) by the quantity of rides sold after the tax. The deadweight loss is the loss in total surplus due to the tax, which is typically less than the tax revenue collected.

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