Suppose Darby values a certain smart phone at $400 . Jake values the same smart phone at $300 . The pre-tax price of this smart phone is $250 . The government imposes a tax of $75 on each smart phone, and the price rises to $325 . The deadweight loss from the tax is
a. $150.
b. $100.
c. $50.
d. $0.
c
You might also like to view...
A trade surplus occurs when:
A. quotas exceed tariffs. B. tariffs exceed quotas. C. imports exceed exports. D. exports exceed imports.
If equilibrium GDP is $800 billion greater than the full employment GDP and the multiplier is 4, how much is the inflationary gap?
What will be an ideal response?
One In the News article is titled "CBO's Flawed Forecasts." According to the text, the CBO's forecasts typically miss the actual budget balance in the fifth year by
A. 4 percent of GDP. B. 2 percent of GDP. C. 1 percent of GDP. D. 3 percent of GDP.
Which of the following best describes the difference between cost-of-service regulation and rate-of-return regulation?
A) Costs determine prices in cost-of-service regulation and prices determine costs in rate-of-return regulation. B) Costs determine prices in cost-of-service regulation and prices are set in rate-of-return regulation so the firm can make a normal rate of return. C) Variable costs determine prices in cost-of-service regulation and prices are set in rate-of-return regulation so the firm can make an economic profit. D) Regulators determine prices in cost-of-service regulation and market forces determine prices in rate-of-return regulation.