If a tax imposed in a market generates deadweight in that market, then the tax:
A. will generate very little tax revenue.
B. could still increase economic surplus, depending on how the tax revenue is spent.
C. will necessarily lower economic surplus.
D. will never be approved by voters.
Answer: B
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The size of a country's "economic pie" is thought of as the total dollar value of all goods and services produced during some period of time. The economic pie
a. is a fixed total waiting to be divided up among people. b. determines how much wealth an individual can obtain. c. is variable, not fixed, across time periods. d. depends solely upon the natural resources of a country.
If the first copy cost of a music video is $223,000 and the marginal cost is $0, how much total cost would the firm incur if it produces 1 million copies?
A. zero B. $223,000 C. $1 million D. $1 million + $223,000