Why the deadweight loss from a tax is proportional to the square of the tax rate? I can't understand this. Could you please explain it more precisely?
Why the deadweight loss from a tax is proportional to the square of the tax rate? I can't understand this. Could you please explain it more precisely?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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-In fact, as taxes increase, the
-The deadweight loss is the area of a triangle and the area of a triangle depends on the square of its size.
-If we double the size of a tax, the base and height of the triangle both double so the area of the triangle (the deadweight loss) rises by a factor of four.
This is an excerpt from Chapter 8: Application the Costs of
Why the deadweight loss from a tax is proportional to the square of the tax rate? I can't understand this. Could you please explain it more precisely?
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