Heike values a pair of blue jeans at €40. If the price is €35, Heike buys the jeans and generates consumer surplus of €5. Suppose a tax is placed on blue jeans that causes the price of blue jeans to rise to €45. Now Heike chooses not to buy a pair of jeans. This example has demonstrated
A) the deadweight loss from a tax.
B) the ability-to-pay principle.
C) the benefits principle.
D) horizontal equity.
E) the administrative burden of a tax.
Correct Answer:
Verified
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