The curves to the left show the demand and supply for three different products (A, B and C). The government is looking to introduce a tax on one of these products to help meet its budget deficit. Which of these products should it look to tax if it wants to minimize the deadweight loss from the same size tax?

A)

B)

C)

Which of the following products is your selection most likely to be?

Cigarettes

Beef

Apples

Butter

Transcribed Image Text:

Price Product A Quantity Product A Supply Demand Price Product B Supply Demand Quantity Product B Price Product C Quantity Product C Supply Demand Price Product A Quantity Product A Supply Demand Price Product B Supply Demand Quantity Product B Price Product C Quantity Product C Supply Demand

Answer rating: 100% (QA)

The deadweight loss is a real cost of the tax caused by the reduced consumption under the tax T... View the full answer