Hotel rooms in Smalltown go for $100, and 800 rooms are rented on a typical day.
To raise revenue, the mayor decides to charge hotels a tax of $12 per rented room. After the tax is imposed, the going rate rises to $110, and the number of rooms rented falls to 700.
This tax raises $____ in government revenue and causes a deadweight loss of $____in this market.
The mayor now doubles the tax to $24. The price rises to $120, and the number of rooms rented falls to 600.
This higher tax raises $____ in government revenue and causes a deadweight loss of $____ in this market.
When the tax is doubled, the tax revenue rises by (More than, less than, exactly) double, and the deadweight loss rises by(More than, less than, exactly) double.