Principles of Microeconomics, 7th Edition

Published by South-Western College
ISBN 10: 128516590X
ISBN 13: 978-1-28516-590-5

Chapter 12 - Part IV - The Design of the Tax System - Quick Check Multiple Choice - Page 254: 2

Answer

Choice B.

Work Step by Step

The deadweight loss can be found by looking at the total negative effect on society. Because the tax is of 20 USD, and Andy has 2 students, 20/2=10. Therefore there is a 10USD deadweight loss. If the tax is of 20 USD per piano lesson and Andy has two students. He must pay a total of 40 USD to the government; which is the total tax revenue.
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