Author Question: The tax revenue that is generated by a government tax is counted towards total welfare. Indicate ... (Read 238 times)

Pineapplelove6 · **on:** Jul 1, 2018

The tax revenue that is generated by a government tax is counted towards total welfare.

Indicate whether the statement is true or false

Question 2

A per unit subsidy increases both consumer and producer surplus, but results in a deadweight loss.

Indicate whether the statement is true or false

enass · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

True . The tax will benefit either producers or consumers or both, but will also generate a dead weight loss in total welfare.

Answer to Question 2

True . The government expenditure more than offset the gains to consumer and producer surplus resulting in a deadweight loss.