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

Question

Quizplus · Accepted Answer

Doubling the tax will increase the price of the good, which will lead to a greater reduction in quantity demanded and quantity supplied. The deadweight loss of the tax will increase as a result, which is why it quadruples.

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