(Figure: Consumer and Producer Surplus) According to thefigure, what would happen to the deadweight loss if the taxincreased to $2 per basket of apples?
A)The new tax would minimize deadweight loss.
B)Deadweight loss does not change due to a change in the tax.
C)There is no way to tell what will happen to deadweight loss.
D)Deadweight loss will increase.

Question

(Figure: Consumer and Producer Surplus) According to thefigure, what would happen to the deadweight loss if the taxincreased to $2 per basket of apples?
A)The new tax would minimize deadweight loss. 
B)Deadweight loss does not change due to a change in the tax. 
C)There is no way to tell what will happen to deadweight loss. 
D)Deadweight loss will increase.

Quizplus · Accepted Answer

As the tax increases to $2 per basket of apples, the deadweight loss will increase. This is because at the higher tax rate, both consumer and producer surplus will decrease further, leading to more inefficient outcomes in the market. Therefore, the deadweight loss will increase due to the higher tax rate.

(Figure: Consumer and Producer Surplus) According to Thefigure, What Would