skip to Main Content
The smarter way
to do assignments.

Please note that this is just a preview of a school assignment posted on our website by one of our clients. If you need assistance with this question too, please click on the Order button at the bottom of the page to get started.

Assume that a competitive market has an upward-sloping supply curve and a downward-sloping demand curve, both of which are linear. A tax of size $T is currently imposed in the market. Suppose the tax is doubled. By what multiple will the deadweight loss increase? (You may assume that at the new tax, the equilibrium quantity is positive.)
Questiom:- Assume that a competitive market has an upward-sloping supply curve and a downward-sloping demand curve, both of which are linear. A tax of size $T is currently imposed in the market. Suppose the tax is doubled. By what multiple will the deadweight loss increase? (You may assume that at the new tax, the equilibrium quantity is positive.) Answer :- Tax revenue varies with the proportion of the tax as a percentage of the product price. In most cases, a moderate tax rate will yield the most tax revenue, as can be seen from the first diagram above. When the tax rate is small or high, tax revenue…

ill be less. When the tax rate is small, the government only gets a small portion of the price paid. When the tax rate is high, then the quantity sold is much less, so even when it is multiplied by the high tax rate, it yields little revenue, which can be seen in the diagrams below. Also illustrated is that the deadweight loss of a high tax rate is much greater than the deadweight loss of a low tax rate.

GET HELP WITH THIS ASSIGNMENT TODAY

Clicking on this button will take you to our custom assignment page. Here you can fill out all the additional details for this particular paper (grading rubric, academic style, number of sources etc), after which your paper will get assigned to a course-specific writer. If you have any issues/concerns, please don’t hesitate to contact our live support team or email us right away.

How It Works        |        About Us       |       Contact Us

© 2018 | Intelli Essays Homework Service®

Back To Top