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Business, 18.02.2020 04:58 howell62

Suppose Rebecca needs a dog sitter so that she can travel to her sister's wedding. Rebecca values dog sitting for the weekend at $200. Susan is willing to dog sit for Rebecca so long as she receives at least $175. Rebecca and Susan agree on a price of $185. Suppose the government imposes a tax of $30 on dog sitting. What is the deadweight loss of the tax?

a.
the maximum value that Rebecca would pay for dog sitting

b.
the $30 tax

c.
the lost benefit to Rebecca and Susan because after the tax, Susan will not dog sit for Rebecca

d.
the lost benefit to Rebecca of being unable to hire a dog sitter because Rebecca is the one who would pay the tax

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Answers: 1

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