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Efficiency of TaxationThe graph shows the demand (D) and supply (S) for the oil market. Assume that ...

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Efficiency of TaxationThe graph shows the demand (D) and supply (S) for the oil market. Assume that ...

Efficiency of Taxation

The graph shows the demand (D) and supply (S) for the oil market.

Assume that A=235, B=175, C=100, D=25, E=30, and F=135. What is the excess burden of a government imposed tax equal to (P4-P2)? Suppose this market suffers from a negative externality and the amount of the tax equals the marginal external cost of the externality. What is the excess burden of the tax?

▸ $130, $130

▸ $330, $330

▸ $130, $0

▸ $330, $130

Textbook

Macroeconomics

Edition: 3^rd

Authors: Acemoglu, Laibson, List

Read 46 times

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