Multiple Choice
Figure 15.2
Figure 15.2 shows a demand curve and two sets of supply curves, one set more elastic than the other.
-Refer to Figure 15.2.If the government imposes an excise tax of $1.00 on every unit sold, what is the size of the deadweight loss, if there is any?
A) the area adc if the supply curve is S₀ and the area bec if the supply curve is S₁.
B) the area afcd if the supply curve is S₀ and the area bfce if the supply curve is S₁.
C) the area becf under either supply curve.
D) There is no deadweight loss; revenue raised is used to fund government projects.
Correct Answer:
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