If the tax on a good is doubled,the deadweight loss of the tax
A)remains constant.
B)doubles.
C)quadruples.
D)decreases by a percentage that cannot be determined without further information.

Question

Quizplus · Accepted Answer

The deadweight loss of a tax is directly proportional to the square of the tax rate. Doubling the tax rate would quadruple the deadweight loss. Therefore, the correct choice is C.

If the Tax on a Good Is Doubled,the Deadweight Loss