Question

Can the deadweight loss arising from a tax be larger than the tax revenue collected? Why or why not?

Answer 1

Yes,

because tax revenue increases first and then decrease vs deadweight loss increases as tax increase so after a point deadweight loss increase and higher than tax revenue where tax revenue decreases.

The tax revenue first increases as tax increase and then decreases because the increase in tax decreases quantity in equilibrium and if there is very high tax then there will be no quantity demanded at the max tax level so the tax increase increases revenue for first half then decreases but the deadweight loss increases as the tax increases because the area of deadweight loss increase as tax increases.