If the government decides to impose a $700 tax on Canadian citizens vacationing abroad,then the deadweight loss from this tax will be:

Question

Quizplus · Accepted Answer

A $700 tax on citizens vacationing abroad is likely to result in a significant reduction in international travel for Canadians. This reduction in travel will lead to a decrease in consumer surplus and producer surplus within the travel industry, as well as a reduction in government revenue from tourist-related taxes. This reduction in overall welfare is known as the deadweight loss, and in this case, it is likely to be relatively large. Therefore, the correct answer is B) relatively large.

If the Government Decides to Impose a $700 Tax on Canadian