a. Incorrect. The contrary happens as soon as demand and supply space perfectly inelastic.b. Incorrect. Counter example: 100% taxes on sales
You are watching: A tax that raises no revenue for the government cannot have any deadweight loss.
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Ah, very first we will evaluation the principle of dead weight lost. That weight lose is the fall in full surplus that outcomes from a sector distortion such as text. We have the right to illustrate the weight ns from assaults in a supply and also demand diagram. The red period represents the early equilibrium where there's no text after test, the quantity diminished to a smaller sized level. The size of the tax is represented by a vertical street in blue, and they're rectangular in blue. Represent the text revenue, which is accumulated by the government. You have the right to see that after text, the buyers pay a higher price 보다 the initial price equilibrium, and the sellers get a price the is lower than the price in the early equilibrium. The weight ns is this area, the triangle. This wrangle of which area is made decision by the dimension of the text and the palliation in quantity. The size of the triangle would depend on their elasticity that the it is provided curve and also the demand curve. Currently let's concerned the first statement. Yeah, strikes that has actually no deadweight loss can raise revenue for the government. This is a new, incorrect statement. That is incorrect due to the fact that we can find unexamined every where strikes with no deadweight loss however still raise revenue for the government. It occurred when the government imposed the text and demand. Our it is provided is perfectly in elastic. Yeah, so this is a situation of a in elastic supply and also this is the illustration of perfect in elastic demand. When we have actually perfectly elastic need or supply attacks will have actually no result on the quantity and it causes no deadweight loss yet still raise revenue because that the government. At its part, A and also in part B attacks that raises no revenue for the federal government can have any kind of dead load loss. This is also incorrect. A respond to example is the instance of a 100% text implemented on sellers. Yeah, the sellers in this situation would not supply any of the good, for this reason the text will raise no revenue. Yet the text has a huge deadweight loss because it reduces the amount sold come zero. For this reason we deserve to illustrate the on a diagram of supply and demand as follow. Yeah, this is the early stage equilibrium v a 100% tax on the sellers or on the sales the goods. Then the deadweight loss would certainly be the entirety area here, and the quantity provided this really heavy message is zero