Suppose that the equilibrium quantity in the market for widgets has been 300 per month. Then a tax of $5 per widget is imposed. The price paid by buyers increases by $2 and the after-tax price received by sellers falls by $3. The government is able to raise 1000 per month in revenue from the tax. What is the deadweight loss from the tax? $250 $50 $100 $500

Suppose that the equilibrium quantity in the market for widgets has been 300 per month. Then a tax of $5 per widget is imposed. The price paid by buyers increases by $2 and the after-tax price received by sellers falls by $3. The government is able to raise 1000 per month in revenue from the tax. What is the deadweight loss from the tax? $250 $50 $100 $500

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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