Table 12-2
-Refer to Table 12-2. Suppose that the government imposes a $2 tax on delights, causing the price to increase from $4.00 to $6.00. Deadweight loss arises because
A)Lucy will pay more tax as a percentage of her value of delights than Ricky.
B)Ricky must pay the $2.00 tax from his consumer surplus.
C)Ricky will have to pay a higher price for delights.
D)Lucy will leave the market.

Question

Table 12-2 
-Refer to Table 12-2. Suppose that the government imposes a $2 tax on delights, causing the price to increase from $4.00 to $6.00. Deadweight loss arises because
A)Lucy will pay more tax as a percentage of her value of delights than Ricky. 
B)Ricky must pay the $2.00 tax from his consumer surplus. 
C)Ricky will have to pay a higher price for delights. 
D)Lucy will leave the market.

Quizplus · Accepted Answer

Deadweight loss arises when a tax causes consumers like Lucy to leave the market, reducing the total quantity of delights sold and leading to a loss of economic efficiency.

Table 12-2 -Refer to Table 12-2. Suppose That the Government Imposes a Government