Assuming that the income effects are negligible and that beer is sold in a competitive market, a 10cent per can tax on beer that causes a 10,000 can per month decline in sales will result in an excess burden of $1,000 per month.

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Quizplus · Accepted Answer

The excess burden, or deadweight loss, is not simply the tax amount multiplied by the decline in sales. It depends on the elasticity of demand and supply, and is typically calculated using the formula for deadweight loss, which involves the change in quantity and the tax per unit.

Assuming That the Income Effects Are Negligible and That Beer