If the government imposes a tax on heating oil:
a. Would the DWL on this tax likely be greater in the first year it is imposed, or the fifth year?
b. Would the revenue collected from this tax likely be greater in the first year after it is imposed or in the fifth year?
2 comments:
Sorry, Josh...the graphs are always changing.
But I can say - if there is a tax, there will be DWL, because of the nature of taxes.
As for the other answers, I actually like Reid's explanation the best - it takes both Emily's and Joe's into account. It really depends on if you are looking at long or short term - so both Emily and Joe are right. But Reid brings them together with explanation.
Good job, you guys!
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