A tax of $0.25 is imposed on each bag of potato chips that is sold.The tax  decreases producer surplus by $600 per day;
 generates tax revenue of $1,220 per day;
 decreases the equilibrium quantity of potato chips by 120 bags per day.
From this information,it follows that the tax
A)decreases consumer surplus by $645 per day.
B)decreases the equilibrium quantity from 6,000 bags per day to 5,880 bags per day.
C)decreases total surplus from $3,000 to $1,800 per day.
D)produces a deadweight loss of $15 per day.

Question

Quizplus · Accepted Answer

The deadweight loss can be calculated as the loss in total surplus, which is the decrease in quantity (120 bags) times half the tax ($0.25/2), resulting in a deadweight loss of $15 per day.

A Tax of $0