The Amount of Deadweight Loss That Results from a Tax

question 36

Multiple Choice

The amount of deadweight loss that results from a tax of a given size is determined by

• A)whether the tax is levied on buyers or sellers.
• B)the number of buyers in the market relative to the number of sellers.
• C)the price elasticities of demand and supply.
• D)the ratio of the tax per unit to the effective price received by sellers.

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Definitions:

Annual Lease

is a contract specifying the terms under which one party agrees to rent property from another party for a period of one year.

Entrepreneur's Forgone Interest

The potential income an entrepreneur sacrifices by investing resources in their own business rather than applying them elsewhere.

Marginal Product

The additional output resulting from the use of one more unit of a factor of production, holding other factors constant.