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What happens to the deadweight loss and tax revenue when a tax is increased?
Wiki User
∙ 12y ago
The deadweight loss of a tax rises more than proportionally as the tax rises. Tax revenue, however, may increase initially as a tax rises, but as the tax rises further, revenue eventually declines. For example; if you sell a product with a $1.00 tax, you have less tax revenue than if you sold twenty of the product with a .10 cent tax. When you increase a tax, the revenue goes down because the product will not sell at that higher price.
Wiki User
∙ 12y ago
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Give an example of deadweight loss?
Deadweight loss (DWL) can be caused by taxation.
Does price gouging create a deadweight loss?
Yes, price gouging creates a deadweight loss.
How the deadweight loss influence the consumer surplus and producer surplus?
Deadweight loss reduces the amount of consumer and producer surplus.
Why does a monopoly cause a deadweight loss?
because it went to the bathroom and pooped all the deadweight
Is the loss caused by a monopoly similar to the deadweight loss from taxation?
yes!
Give an example of deadweight loss?
Deadweight loss (DWL) can be caused by taxation.
Does price gouging create a deadweight loss?
Yes, price gouging creates a deadweight loss.
How the deadweight loss influence the consumer surplus and producer surplus?
Deadweight loss reduces the amount of consumer and producer surplus.
Why does a monopoly cause a deadweight loss?
because it went to the bathroom and pooped all the deadweight
Is the loss caused by a monopoly similar to the deadweight loss from taxation?
yes!
When is the deadweight loss the greatest?
when both demand and supply are elastic
The size of a tax and the deadweight loss that results from the tax are?
Positively related
What are the determinants of the dead weight loss in economics?
The determinants of the deadweight loss in economics are the price elasticities of supply and demand.
What tools help us evaluate how taxes affect economic well-being?
deadweight loss
Does an increase of economic surplus in a market always mean that economic efficiency has increased?
No. If marginal cost of production decreases but market output stays the same, economic surplus and deadweight loss both increase, causing economic efficiency to decrease.
What is deadweight loss of taxation?
its a loss of economic well being brought by taxation where a state imposes tax and taxed goods and services are less attractive to consumers
How internal deficit financing hasten the country's economic growth?
It will likely increase the country's short-run economic growth, given that adjustment to increased deficit spending (assuming it is inefficient, in this case) causes a deadweight social loss from redistribution, but lower its long-run growth.
