Adam,Barb,and Carli each like to read novels.The current bestseller costs $10.Adam values it at $15,Barb at $13,and Carli at $11.Suppose that if the government taxes books at $2 each,the selling price will rise to $12.A consequence of the tax is that
A) consumer surplus shrinks by $4 and tax revenues increase by $6,so there is a deadweight loss of $2.
B) consumer surplus shrinks by $6 and tax revenues increase by $6,so there is no deadweight loss.
C) consumer surplus shrinks by $5 and tax revenues increase by $6,so there is no deadweight loss.
D) consumer surplus shrinks by $5 and tax revenues increase by $4,so there is a deadweight loss of $1.
Correct Answer:
Verified
Q158: An efficient tax system is one that
Q176: Table 12-2
Consider the tax rates shown in
Q177: Table 12-2
Consider the tax rates shown in
Q186: Deadweight losses represent the
A) inefficiency that taxes
Q281: A tax system with little deadweight loss
Q282: In designing a tax system, policymakers have
Q295: The resources that a taxpayer devotes to
Q316: Taxes can create deadweight losses because they
A)allow
Q366: Part of the administrative burden of a
Q492: Suppose a country imposes a lump-sum income
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents