Reference no: EM132294157

Eggs have a supply curve that is linear and upward-s1oping and a demand curve that is linear and downward-sloping. If a 2 cent per egg tax is increased to 3 cents, the deadweight loss of the tax is:

a) increases by less than 50 per cent and may even decline.

b) increases by exactly 50 per cent.

c) increases by more than 50 per cent.

d) depends supply or demand is more elastic.

Peanut butter has an upward-sloping supply curve and a downward-s1oping demand curve. If a 10 cent per kilo tax is increased to 15 cents, the government's tax revenue:

a) increases by less than 50 per cent and may even decline.

b) increases by exactly 50 per cent.

c) increases by more than 50 per cent.

d) depends on whether supply or demand is more elastic.

What are the answers to these 2 multiple choice questions and if it's different, why does having a linear demand and supply in the first question give you a different answer?