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Suppose the government places a tax on a product. How does the cost of the tax compare with the revenue raised? The cost of the tax to buyers and sellers is less than the revenue raised from the tax by the government. Without additional information, such as the elasticity of demand for this product, it is impossible to compare tax cost with tax revenue. The loss of surplus to buyers and sellers exceeds the revenue raised from the tax by the government. The cost of the tax to buyers and sellers equals the revenue raised from the tax by the government.

Suppose the government places a tax on a product. How does the cost of the tax compare with the revenue raised? The cost of the tax to buyers and sellers is less than the revenue raised from the tax by the government. Without additional information, such as the elasticity of demand for this product, it is impossible to compare tax cost with tax revenue. The loss of surplus to buyers and sellers exceeds the revenue raised from the tax by the government. The cost of the tax to buyers and sellers equals the revenue raised from the tax by the government.

Principles of Microeconomics
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter8: Application: The Cost Of Taxation
Section: Chapter Questions
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Suppose the government places a tax on a product. How does the cost of the tax compare with the revenue raised? The cost of the tax to buyers and sellers is less than the revenue raised from the tax by the government. O Without additional information, such as the elasticity of demand for this product, it is impossible to compare tax cost with tax revenue. The loss of surplus to buyers and sellers exceeds the revenue raised from the tax by the government. The cost of the tax to buyers and sellers equals the revenue raised from the tax by the government.
Transcribed Image Text:Suppose the government places a tax on a product. How does the cost of the tax compare with the revenue raised? The cost of the tax to buyers and sellers is less than the revenue raised from the tax by the government. O Without additional information, such as the elasticity of demand for this product, it is impossible to compare tax cost with tax revenue. The loss of surplus to buyers and sellers exceeds the revenue raised from the tax by the government. The cost of the tax to buyers and sellers equals the revenue raised from the tax by the government.
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