Assume that for good X the supply curve for a good is a typical,upward-sloping straight line,and the demand curve is a typical downward-sloping straight line.If the good is taxed,and the tax is doubled,the
A)base of the triangle that represents the deadweight loss doubles.
B)height of the triangle that represents the deadweight loss doubles.
C)deadweight loss of the tax quadruples.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

The deadweight loss of a tax is represented by a triangle. The base of the triangle is the change in quantity supplied, and the height of the triangle is the change in price. If the tax is doubled, the change in quantity supplied will double, and the change in price will also double. This means that the base of the triangle will double, and the height of the triangle will double. Therefore, the deadweight loss of the tax will quadruple.

Assume That for Good X the Supply Curve for a Good