(Figure: A Market with a Tax) Use Figure: A Market with a Tax.The efficiency loss resulting from this tax is:

A) (P₁ - P₃) Q₂.
B) (P₁ - P₂) Q₁
C) 0.5(P₁ - P₃) (Q₂ - Q₁) .
D) 0.5(P₁ - P₃) Q₁.

Question

Danielle Plowright · Accepted Answer

Final Answer : C, Explanation :  The efficiency loss (deadweight loss) from a tax is represented by the area of a triangle, which is calculated as 0.5 * base * height. The base is the difference in quantity (Q 2  - Q 1 ), and the height is the difference in price before and after the tax (P 1  - P 3 ).

(Figure: A Market with a Tax) Use Figure: A Market with a Tax.The efficiency loss resulting from this tax is:

A) (P₁ - P₃) Q₂.
B) (P₁ - P₂) Q₁
C) 0.5(P₁ - P₃) (Q₂ - Q₁) .
D) 0.5(P₁ - P₃) Q₁.

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Learning Objectives

Related questions

(Figure: A Market with a Tax) Use Figure: A Market with a Tax.The efficiency loss resulting from this tax is:A) (P1 - P3) Q2.B) (P1 - P2) Q1C) 0.5(P1 - P3) (Q2 - Q1) .D) 0.5(P1 - P3) Q1.

Definitions

Learning Objectives

Learning Objectives

Related questions

(Figure: A Market with a Tax) Use Figure: A Market with a Tax.The efficiency loss resulting from this tax is:

A) (P₁ - P₃) Q₂.
B) (P₁ - P₂) Q₁
C) 0.5(P₁ - P₃) (Q₂ - Q₁) .
D) 0.5(P₁ - P₃) Q₁.