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 $5 per-unit tax, 350 units are sold. After the tax, 270 units are sold. What is the government's tax revenue?

Show solution

Revenue = $5 × 270 = $1,350.

Problem 2.

Before a $5 per-unit tax, 320 units are sold. After the tax, 240 units are sold. What is the government's tax revenue?

Show solution

Revenue = $5 × 240 = $1,200.

Problem 3.

Before a $2 per-unit tax, 280 units are sold. After the tax, 260 units are sold. What is the government's tax revenue?

Show solution

Revenue = $2 × 260 = $520.

Problem 4.

Before a $4 per-unit tax, 280 units are sold. After the tax, 260 units are sold. What is the deadweight loss?

Show solution

DWL = ½ × $4 × (280 − 260) = $40.

Problem 5.

Before a $5 per-unit tax, 160 units are sold. After the tax, 100 units are sold. What is the government's tax revenue?

Show solution

Revenue = $5 × 100 = $500.

Problem 6.

Before a $3 per-unit tax, 350 units are sold. After the tax, 330 units are sold. What is the deadweight loss?

Show solution

DWL = ½ × $3 × (350 − 330) = $30.