a. To raise revenue, the mayor decides to charge hotels a tax of $10 per rented room.

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a. To raise revenue, the mayor decides to charge hotels a tax of $10 per rented room. After the tax is imposed, the going rate rises to $108, and the number of rooms rented falls to 900. Calculate the amount of revenue this tax raises for Smalltown and the deadweight loss of the tax. (Hint: The area of a triangle is ¥4 ¥ base x height.)

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