If Uber is required to start paying the value-added tax (VAT)in Great Britain, this will have the potential to raise the equilibrium price in this market and, therefore, decrease efficiency.This would have a tendency to
A)decrease producer surplus and decrease deadweight loss.
B)decrease consumer surplus and increase deadweight loss.
C)increase consumer surplus and increase producer surplus.
D)maximize consumer surplus and minimize producer surplus.

Question

Quizplus · Accepted Answer

If Uber is required to start paying the value-added tax (VAT), it will increase their costs and this cost may ultimately be passed on to consumers in the form of higher prices, which would decrease consumer surplus. Additionally, the decrease in efficiency may result in an increase in Deadweight Loss. Therefore, the best answer is B, as it explains the decrease in consumer surplus and increase in deadweight loss.

If Uber Is Required to Start Paying the Value-Added Tax