Scenario 20-2 The table below represents sales, prices, taxes, marginal deadweight loss and marginal tax revenue for a fictional municipality Lexville. Marginal Marginal tax Deadweight revenue in Sales in Price Tax loss, in thousands in Commodity thousands per per thousands of units thousands per unit unit per $0.01 $0.01 increase increase in in tax tax Coffee 1000 $5 $0.50 50 60 Beer 2000 $3 $0.30 30 120 Milk 5000 $2 $0.20 60 40Question 35 W 1 Pts Referto scenario 20-2. Which of the following is correct? '-' Answered As the tax rate on coffee increases, marginal deadweight loss remains constant. rrect Answer As the tax rate on coffee increases. marginal deadweight loss increases. none of these answers are correct As the tax rate on coffee increases. marginal deadweight loss decreases. Question 36 D f 1 Pts Referto scenario 20-2. Which of the following is correct? u Answered As the tax rate on coffee increases, marginal revenue of taxation remains constant. none of these answers are correct As the tax rate on coffee increases, marginal revenue of taxation increases. rrect Answer As the tax rate on coffee increases. marginal revenue of taxation decreases. Question 38 0 I 1 pts ct Answer Refer to scenario 202. Suppose the value of an additional dollar of government revenue is Lexville is 1. What changes would you recommend to tax rates to improve efciency? Increase the tax rates on coffee and beer and reduce tax rates on milk. Increase tax rates on beer. reduce tax rates on milk and coffee. Increase the tax rates on milk, reduced tax rates on coffee and beer. Reduce tax rates on all commodities. Increase tax rates on all commodities. Question 39 0 1' 1 Pts Gt Answer Refer to scenario 202. Suppose the markets for milk. coffee, and beer are perfectly competitive. At current prices and quantities, which good has the most inelastic demand? coffee beer all have the same elasticity Question 40 1 i 1 Pts Refer to scenario 202. Suppose the markets for milk. coffee, and beer are perfectlyr competitive. What does the Ramesy rule suggest? - '' Adjust ta): rates. but keep positive ta): rates on milk. coffee, and beer. Set the tax rate of beer to zero and tax only milk and coffee. Set the tax rate of milk to zero and tax only coffee and beer. Set all tax rates to zero