Figure 8-21
-Refer to Figure 8-21.Suppose the market is represented by Demand 1 and Supply 1.At first the government places a $3 per-unit tax on this good.Then the government decides to raise the tax to $6 per unit.How would you characterize the decision to raise the tax rate from $3 to $6 per unit? The decision is
A)a good one because it increases tax revenue while decreasing the deadweight loss from the tax.
B)a bad one because it does not increase tax revenue yet increases the deadweight loss from the tax.
C)a bad one because it decreases tax revenue while increasing the deadweight loss from the tax.
D)unclear because it increases tax revenue yet also increases the deadweight loss from the tax.

Question

Figure 8-21 
-Refer to Figure 8-21.Suppose the market is represented by Demand 1 and Supply 1.At first the government places a $3 per-unit tax on this good.Then the government decides to raise the tax to $6 per unit.How would you characterize the decision to raise the tax rate from $3 to $6 per unit? The decision is
A)a good one because it increases tax revenue while decreasing the deadweight loss from the tax. 
B)a bad one because it does not increase tax revenue yet increases the deadweight loss from the tax. 
C)a bad one because it decreases tax revenue while increasing the deadweight loss from the tax. 
D)unclear because it increases tax revenue yet also increases the deadweight loss from the tax.

Quizplus · Accepted Answer

The Answer of Figure 8-21 
-Refer to Figure 8-21.Suppose the market is represented by Demand 1 and Supply 1.At first the government places a $3 per-unit tax on this good.Then the government decides to raise the tax to $6 per unit.How would you characterize the decision to raise the tax rate from $3 to $6 per unit? The decision is
A)a good one because it increases tax revenue while decreasing the deadweight loss from the tax. 
B)a bad one because it does not increase tax revenue yet increases the deadweight loss from the tax. 
C)a bad one because it decreases tax revenue while increasing the deadweight loss from the tax. 
D)unclear because it increases tax revenue yet also increases the deadweight loss from the tax.

Figure 8-21 -Refer to Figure 8-21.Suppose the Market Is Represented by Demand