Answer
Deadweight loss grows larger, tax revenue increases less and less, then starts to fall.
Work Step by Step
As a tax grows larger, it distorts incentives more and reduces the size of the market.
Principles of Microeconomics, 7th Edition
by Mankiw, N. Gregory
Published by
South-Western College
ISBN 10:
128516590X
ISBN 13:
978-1-28516-590-5
Chapter 8 - Part III - Application: The Costs of Taxation - Questions for Review - Page 168: 5
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