The Efficiency Loss of a Tax Is the Idea That

question 224

Multiple Choice

The efficiency loss of a tax is the idea that

• A)in addition to taking income from the citizenry, taxes also increase the rate of inflation.
• B)taxes cause a decline in output for which marginal benefit exceeds marginal cost.
• C)taxes diminish incentives to work.
• D)government spends dollars less efficiently than do households and businesses.

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Definitions:

Price Elastic

A measure of how much the demand for a product or service changes in response to a change in its price.

Sales Volume

The number of units of a product or service sold by a company in a specified period.

Local Dealerships

Businesses authorized to sell and service vehicles from specific manufacturers within a designated geographic area.

Cheapest Product

The item or service offered at the lowest price among a range of products.