Suppose that a government imposes a tax on a product of £9.3 per unit. As a result of this tax, the equilibrium quantity of the good decreases by 18.7 units and the equilibrium price increases by 80p. What is the dead weight loss induced by this tax in £?

Suppose that a government imposes a tax on a product of £9.3 per unit. As a result of this tax, the equilibrium quantity of the good decreases by 18.7 units and the equilibrium price increases by 80p. What is the dead weight loss induced by this tax in £?

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter22: Price Takers And The Competitive Process

Section: Chapter Questions

Problem 4CQ

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Question

Suppose that a government imposes a tax on a product of £9.3 per unit. As a
result of this tax, the equilibrium quantity of the good decreases by 18.7 units
and the equilibrium price increases by 80p. What is the dead weight loss
induced by this tax in £?

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