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 tripled,the
A)base of the triangle that represents the deadweight loss triples.
B)height of the triangle that represents the deadweight loss triples.
C)deadweight loss of the tax increases by a factor of nine.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

The deadweight loss of a tax is represented by a triangle, with the base of the triangle representing the change in quantity and the height of the triangle representing the change in price. If the tax is tripled, the change in quantity will triple, and the change in price will also triple. This means that the base of the triangle will triple, the height of the triangle will triple, and the area of the triangle (which represents the deadweight loss) will increase by a factor of nine.

Assume That for Good X the Supply Curve for a Good