The Deadweight Loss Resulting from Levying a Tax on an Economic

question 85

Multiple Choice

The deadweight loss resulting from levying a tax on an economic activity is

• A) the tax revenue directed to the government as the result of the tax.
• B) the loss of potential gains from trade from activities forgone because of the tax.
• C) the increase in the price of an activity as the result of the tax levied on it.
• D) the marginal benefits derived from the expansion in government activities made possible by the increase in tax revenues.

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Definitions:

Operating Expenses

Costs associated with the day-to-day operations of a business, including rent, utilities, and payroll.

Customer-Led Pricing

A pricing strategy that asks customers how much they are willing to pay and then offers the product at that price.

Pricing Strategy

The approach businesses use to set the prices for their products or services, influencing sales and revenue.

Introductory Offer

A pricing strategy to encourage people to try a new product by offering it for free or at a heavily discounted price.