A Deadweight Loss Is a Consequence of a Tax on a Good

question 152

Multiple Choice

A deadweight loss is a consequence of a tax on a good because the tax

• A)induces the government to increase its expenditures.
• B)induces buyers to consume less, and sellers to produce less, of the good.
• C)causes a disequilibrium in the market.
• D)imposes a loss on buyers that is greater than the loss to sellers.

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Definitions:

Labor

Employing human mental and physical work in generating services and manufacturing goods.

Workers

Individuals engaged in any form of economic activity or labor, typically for the purpose of earning wages or salary.

Marginal Products

The additional output resulting from a one-unit increase in the use of a variable input, holding all other inputs constant.

Additional Workers

New employees hired by firms, contributing to increased production capacity or service provision.