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 revenue Sales in Deadweight loss, Commodity thousands Price per Tax per in thousands in in thousands per unit unit of units thousands per $0.01 $0.01 increase in increase in tax tax Coffee 1000 $5 $0.50 50 60 Beer 2000 $3 $0.30 30 120 Milk 5000 $2 $0.20 60 40 Question 35 1 pts Refer to scenario 20-2. Which of the following is correct? O As the tax rate on coffee increases, marginal deadweight loss remains constant. As the tax rate on coffee increases, marginal deadweight loss increases. O none of these answers are correct O As the tax rate on coffee increases, marginal deadweight loss decreases. Question 36 1 pts Refer to scenario 20-2. Which of the following is correct? O As the tax rate on coffee increases, marginal revenue of taxation remains constant. O none of these answers are correct O As the tax rate on coffee increases, marginal revenue of taxation increases. O As the tax rate on coffee increases, marginal revenue of taxation decreases.Question 37 1 pts Refer to scenario 20-2. Which good is currently taxed at the lowest rate? O Milk O Coffee O all are currently taxed at the same rate O Beer Question 38 1 pts Refer to scenario 20-2. Suppose the value of an additional dollar of government revenue is Lexville is 1. What changes would you recommend to tax rates to improve efficiency? O Increase the tax rates on coffee and beer and reduce tax rates on milk. O 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. O Increase tax rates on all commodities. Question 39 1 pts Refer to scenario 20-2. Suppose the markets for milk, coffee, and beer are perfectly competitive. At current prices and quantities, which good has the most inelastic demand? O coffee O beer O milk O all have the same elasticityQuestion 40 1 pts Refer to scenario 20-2. Suppose the markets for milk, coffee, and beer are perfectly competitive. What does the Ramesy rule suggest? O Adjust tax rates, but keep positive tax rates on milk, coffee, and beer. O Set the tax rate of beer to zero and tax only milk and coffee. O Set the tax rate of milk to zero and tax only coffee and beer. O Set all tax rates to zero. Question 41 1 pts Generally, luxury goods have relatively elastic demand where demand for necessities (like food) is relatively inelastic. What explains why luxuries are taxed at higher rates than necessities? O The Ramesy rule suggests luxury goods should be taxed at higher rates. O Society values redistribution and equity. O Politicians do not understand the concept of elasticity. O all of these answers are correct