The following graph shows the effect of a tax imposed on soft drinks. Use this graph to
Question:
The following graph shows the effect of a tax imposed on soft drinks. Use this graph to answer the questions.
a. Which areas in the graph represent the excess burden (deadweight loss) of the tax?
b. Which areas represent the revenues collected by the government from the tax?
c. Would economists consider this tax to be efficient? Briefly explain.
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