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Old 02-29-2008, 03:04 PM
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economics question?

The deadweight loss from an excise tax comes about because:
A. total consumer surplus is at a maximum because some mutually beneficial transactions are eliminated

B. total consumer plus producer surplus is reduced since some mutually beneficial transactions are eliminated.

C. total producer surplus is at a maximum because some mutually beneficial transactions are eliminated.

D. total consumer plus producer surplus is at a maximum because consumers pay a higher price than previously, and producers accept a lower price than previously.
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