Credit Sprint / Practice problems / Tax revenue and deadweight loss

Tax revenue and deadweight loss practice problems

Microeconomics Unit 2. Try each one, then open the worked solution. The Credit Sprint app generates unlimited new versions with fresh numbers.

Problem 1.

Before a $3 per-unit tax, 290 units are sold. After the tax, 260 units are sold. What is the deadweight loss?

Show solution

DWL = ½ × $3 × (290 − 260) = $45.

Problem 2.

Before a $1 per-unit tax, 170 units are sold. After the tax, 100 units are sold. What is the deadweight loss?

Show solution

DWL = ½ × $1 × (170 − 100) = $35.

Problem 3.

Before a $5 per-unit tax, 210 units are sold. After the tax, 160 units are sold. What is the government's tax revenue?

Show solution

Revenue = $5 × 160 = $800.

Problem 4.

Before a $1 per-unit tax, 310 units are sold. After the tax, 290 units are sold. What is the government's tax revenue?

Show solution

Revenue = $1 × 290 = $290.

Problem 5.

Before a $4 per-unit tax, 260 units are sold. After the tax, 210 units are sold. What is the government's tax revenue?

Show solution

Revenue = $4 × 210 = $840.

Problem 6.

Before a $1 per-unit tax, 390 units are sold. After the tax, 320 units are sold. What is the deadweight loss?

Show solution

DWL = ½ × $1 × (390 − 320) = $35.