Currently, a 10 cent per gallon tax is levied on gasoline consumption.The tax is increased to 20 cents per gallon.The excess burden of the tax will:

Question

Quizplus · Accepted Answer

The excess burden of the tax will increase four times. This is because the tax has doubled, so the deadweight loss (excess burden) increases by a factor of four (square of the proportional change in the tax rate).

Currently, a 10 Cent Per Gallon Tax Is Levied on Gasoline