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If a $2 Tax on Cigarettes Decreases Both Consumer and Producer

Question 41

Multiple Choice

If a $2 tax on cigarettes decreases both consumer and producer surplus:


A) tax revenues will exactly equal the amount of the lost consumer and producer surplus.
B) tax revenues will be less than the amount of the lost consumer and producer surplus.
C) tax revenues will be more than the amount of the lost consumer and producer surplus.
D) there will be no deadweight loss.

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