Suppose the tax on gasoline is raised from $0.50 per gallon to $2.50 per gallon.As a result,

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The deadweight loss of the tax necessarily increases because a higher tax leads to a larger distortion in the market, reducing the quantity of gasoline traded and creating a larger loss in economic efficiency. However, tax revenue does not necessarily increase as it depends on the elasticity of demand and supply, and the demand curve's slope is not affected by the tax itself.

Suppose the Tax on Gasoline Is Raised from $0