Answer to Question #152364 in Microeconomics for David Priest

Question

Does Increase in tax on gasoline increase government revenue? Can you be sure that the deadweight loss from gasoline tax will rise? Explain.

Answer 1

Increase in tax on gasoline increases government revenue. if the government increases the tax on gasoline, the deadweight loss  of the tax rises, since deadweight loss  always rises  as the tax  rate rises.