Mathematics · Public Finance Numericals - Deadweight Loss and Tax Revenue
Suppose consumer X places a Rs. 8 value on a bread packet and consumer Y places a Rs. 6 value on it. Without tax, the price is Rs. 5 per packet, so both X and Y buy one packet each. If the government imposes a tax of Rs. 2 per unit, raising the price to Rs. 7, consumer Y stops buying bread while X continues to buy one packet. What are the deadweight loss and total tax revenue collected respectively?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Rs. 2 and Rs. 4
- 2Rs. 1 and Rs. 2✓
- 3Rs. 2 and Rs. 2
- 4Rs. 1 and Rs. 4
Correct answer
Rs. 1 and Rs. 2
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