In the country of Taxopia, the price of a movie ticket is $8 and 3,000 movie tickets
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Question:
In the country of Taxopia, the price of a movie ticket is $8 and 3,000 movie tickets a daily.
a. To raise revenue, the government of Taxopia decides to charge movie theaters an ‘x.x of $2 per ticket sold. After the tax is imposed, the price of a ticket rises to $?.25 and the number Of tickets sold falls to 2,200. Calculate the amount of revenue this tax raises for Tax and the deadweight loss of the tax. (Hint: The area of a triangle is 1/2 X base X height.)
b. The government now decides to double- the tax to $4 per ticket sold. The price rises to $10.50 and the number of all to 1,400. Calculate the tax revenue and deadweight loss with this larger tax. Do they double, more than double, or less double? Explain
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