Which of the following statements is correct? A decrease in the size of a tax always decreases the tax revenue raised by that tax. A decrease in the size of a tax always decreases the deadweight loss of that tax. Tax revenue decreases when there is a small decrease in the tax rate and the economy is on the downward-sloping part of the Laffer curve. An increase in the size of a tax leads to an increase in the deadweight loss of the tax only if the economy is on the upward-sloping part of the Laffer curve.

Deadweight loss refers to the situation where the increase in price reduces the total surplus in the…

Answered: Which of the following statements is…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Which of the following statements is correct?

		A decrease in the size of a tax always decreases the tax revenue raised by that tax.
		A decrease in the size of a tax always decreases the deadweight loss of that tax.
		Tax revenue decreases when there is a small decrease in the tax rate and the economy is on the downward-sloping part of the Laffer curve.
		An increase in the size of a tax leads to an increase in the deadweight loss of the tax only if the economy is on the upward-sloping part of the Laffer curve.

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