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Figure and Table: The Market for Taxi Rides
-(Figure and Table: The Market for Taxi Rides) Look at the 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.

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Use the following to answer questions:
Figure and Table: The Market for Taxi Rides  
-(Figure and Table: The Market for Taxi Rides) Look at the 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 tax revenue is calculated by multiplying the tax per ride ($2) by the quantity of rides sold after the tax is imposed. 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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