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Donna runs an inn and charges $300 a night for a room, which equals her cost. Sam, harry, and bill are three potential customers willing to pay $500, $325, and $250, respectively. When the government levies a tax on innkeepers of $50 per night of occupancy, donna raises her price to $350. The deadweight loss of the tax is.

Sagot :

Answer:

25$

Explanation:

The deadweight loss of the tax is :

According to the given situation, the computation of deadweight loss of the tax is shown below:-

Deadweight Loss = 1 ÷ 2 × 1 × ($350 - $300) = 1 ÷ 2 × ($50)

Deadweight Loss = 1 ÷ 2 × ($50)

Deadweight Loss = $25

The deadweight loss of the tax is $25.

Thus, the correct answer is 25$.

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