Answer to Question #90940 in Microeconomics for Miriam Kazlow

Question

The city of Larchmont imposes new taxes on certain goods. The tax produces revenue of $5,000 for the government. The tax reduces consumer surplus by $3,000 and it reduces producer surplus by $4,000. What is the amount of the deadweight loss of the tax?

Answer 1

3,000+4,000-5,000=$2,000