The government imposes an excise tax on the sale of all toothbrushes. Before the tax, 2 million toothbrushes were sold every year at a price of $1.50. After the tax is imposed, 2 million toothbrushes are sold every year; consumers pay $2 per toothbrush, $1.50 of which producers receive. Assume demand and supply is linear.
a. How much revenue is raised by the tax?
b. Find the ratio of efficiency loss to tax revenue.