Use the following to answer question:
-(Scenario: The Market for Good X)Use Scenario: The Market for Good X.If a $1 per unit tax is imposed,the deadweight loss associated with the tax will be equal to (round all calculations to two decimal places):

Question

Use the following to answer question: 
-(Scenario: The Market for Good X)Use Scenario: The Market for Good X.If a $1 per unit tax is imposed,the deadweight loss associated with the tax will be equal to (round all calculations to two decimal places):

Quizplus · Accepted Answer

The deadweight loss can be calculated using the formula: (1/2) x (tax per unit/price before tax)^2 x change in quantity. Substituting the values from the scenario: (1/2) x (1/5)^2 x 80 = 0.60. Therefore, the deadweight loss associated with the tax is $0.60. Choice D is the correct answer.

Use the Following to Answer Question