Question 21 2 pts If the tax on gasoline increases from 2 to

Question 21 2 pts If the tax on gasoline increases from $2 to $4 per gallon, the deadweight loss from the tax increases by a factor of O one-half. two. O four. O six.

Opiton 1

Deadweight loss = Total Surplus-Tax revenue

Taxes reduces both consumer and producer surplus and the magnitude depends on elasticity of good. As gasoline being price inelastic, the quantity consumed will not be reduced and there would not be much deadweight loss associated.

Question 21 2 pts If the tax on gasoline increases from $2 to $4 per gallon, the deadweight loss from the tax increases by a factor of O one-half. two. O four.

Question 21 2 pts If the tax on gasoline increases from 2 to

Solution

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