When a government imposes a tax in a market, it allows the government to Question 9 options: raise the price received by sellers of the goods that have been taxed. create a more efficient economic system. lower the price paid by buyers for the goods that have been taxed. decrease the deadweight loss in this market. take part of consumer and producer surplus as tax revenue when the good is purchased.

Tax imposed on the good results in same changes irrespective of on whom the tax is imposed.

Answered: When a government imposes a tax in a…

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter2: The One Lesson Of Business

Section: Chapter Questions

Problem 6MC

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When a government imposes a tax in a market, it allows the government to

Question 9 options:

	raise the price received by sellers of the goods that have been taxed.
	create a more efficient economic system.
	lower the price paid by buyers for the goods that have been taxed.
	decrease the deadweight loss in this market.
	take part of consumer and producer surplus as tax revenue when the good is purchased.

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

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