Suppose 'X' places Rs. 8 value on one bread packet and 'Y' places Rs. 6 value on it. If there is no tax on bread, then price of bread packet is Rs. 5. so both X and Y choose to buy one packet each. Now suppose government levies a tax of Rs.. 2 per unit, the price of bread rises to Rs. 7. Then the deadweight loss and tax revenue collected respectively are :
1
Rs. 1 and Rs. 2
2
Rs. 2 and Rs. 4
3
Rs. 2 and Rs. 2
4
Rs. 1 and Rs. 4