Table 12-4

-Refer to Table 12-4.Suppose that the government imposes a $2 tax on delights,causing the price to increase from $4.00 to $6.00.Deadweight loss arises because
A) Lucy will pay more tax as a percentage of her value of delights than Ricky.
B) Ricky must pay the $2.00 tax from his consumer surplus.
C) Ricky will have to pay a higher price for delights.
D) Lucy will leave the market.

Question

Table 12-4
 
-Refer to Table 12-4.Suppose that the government imposes a $2 tax on delights,causing the price to increase from $4.00 to $6.00.Deadweight loss arises because
A) Lucy will pay more tax as a percentage of her value of delights than Ricky. 
B) Ricky must pay the $2.00 tax from his consumer surplus. 
C) Ricky will have to pay a higher price for delights. 
D) Lucy will leave the market.

Quizplus · Accepted Answer

Deadweight loss arises when a tax causes some consumers, like Lucy, to leave the market because the price increase makes the product unaffordable or not worth the cost, leading to a loss of economic efficiency.

Table 12-4 -Refer to Table 12-4.Suppose That the Government Imposes a $2