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Question
Assume that a $0.10/pound tax on apples raises $100 million in revenue but causes a $125 million loss of consumer and producer surplus. From this information, we know that the deadweight loss from the tax is
a. $225 million.
b. $100 million.
c. $125 million.
d. $25 million.
e. $1.25 million.
Answer
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