Last year the local government in Spring Town collected one million dollars in revenue from a new tax, but it created a deadweight loss of 500 thousand dollars. What does this tell us?
a. Lost consumer and producer surplus equaled 1.5 million dollars.
b. Total consumer and producer surplus equaled 1 million dollars.
c. Consumer and producer surplus each equaled half a million dollars.
d. The tax increased net welfare by 2 million dollars.
a. Lost consumer and producer surplus equaled 1.5 million dollars.
You might also like to view...
A worldwide system of fixed exchange rates was organized and maintained under the International Monetary Fund
A) in the three decades before World War I. B) in the years between the world wars. C) from the end of World War II until the early 1970s. D) from the early 1960s to the late 1980s.
One effect of speculators is to iron out price fluctuations because this is the way they make their profits
a. True b. False Indicate whether the statement is true or false
Game theory can be used to investigate
A. why cartels break down. B. why some firms maintain excess productive capacity. C. how oligopolists set prices. D. All of the responses are correct.
Which of the following is not a rationale for protectionist policies?
A. Improve the welfare of domestic consumers. B. Protect domestic workers from foreign competition. C. Help domestic firms establish a world monopoly in a particular market. D. Protect an infant industry from foreign competitors.