The supply curve and the demand curve for a good are straight lines,and the good is taxed.When the tax is doubled,
A)the base of the triangle that represents the deadweight loss quadruples.
B)the height of the triangle that represents the deadweight loss doubles.
C)the deadweight loss of the tax doubles.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

The height of the triangle representing deadweight loss is related to the tax size, so doubling the tax doubles the height. The deadweight loss increases more than proportionally, not just doubling, so option C is incorrect.

The Supply Curve and the Demand Curve for a Good