Producer surplus is equal to gain of government revenue

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Reference no: EM13860983

1. Total surplus in a market does not change when the government imposes a tax on that market because the loss of consumer surplus and producer surplus is equal to the gain of government revenue.

a. True

b. False

2. Taxes cause deadweight losses because they prevent buyers and sellers from realizing some of the gains from trade.

a. True

b. False

3. Taxes on labor tend to encourage second earners to stay at home rather than work in the labor force.

a. True

b. False

Reference no: EM13860983

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