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When a Tax Does Not Have a Deadweight Loss,the Reduction

question 87

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When a tax does not have a deadweight loss,the reduction in surplus is exactly offset by tax revenue collected by the government.


Definitions:

Average Cost

The aggregate expense of manufacturing, when divided by the quantity of items made.

Marginal Costs

The price of generating one more unit of a product or service.

Marginal Productivity

The additional output generated by employing one more unit of a particular resource, while holding other inputs constant.

Returns to Scale

The rate at which production output increases in response to proportional increases in all inputs.

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