Principles of Microeconomics, 7th Edition

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

Chapter 8 - Part III - Application: The Costs of Taxation - Quick Check Multiple Choice - Page 169: 2

Answer

B

Work Step by Step

Chuck doesn't get any more or any less profit. He still cuts the lawn and keeps 50 dollars, so his producer surplus doesn't change. Jane has to pay 10 dollars more, so her consumer surplus is -10 dollars. The government then gets ten dollars, so overall there is no deadweight loss, since the total surplus decreased by 10 and the tax revenue increased by 10.
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