Government revenue from a tax equals the sum of the lost producer surplus and lost consumer surplus.

Name: Government revenue from a tax equals the sum of the lost producer surplus and lost consumer surplus.
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Question

Quizplus · Accepted Answer

Government revenue from a tax equals the tax rate multiplied by the quantity sold, not the sum of the lost producer surplus and lost consumer surplus. The lost producer and consumer surplus contribute to the deadweight loss, not directly to government revenue.

Government Revenue from a Tax Equals the Sum of the Lost