The Efficiency Loss of a Tax Is

question 207

Multiple Choice

The efficiency loss of a tax is

• A) the net value of sacrificed output caused by the tax.
• B) that portion of the tax paid by producers minus the portion paid by consumers.
• C) that portion of the tax paid by consumers minus the portion paid by producers.
• D) the total tax revenue minus the output loss caused by the tax.

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Definitions:

Solidification

The process of a liquid becoming solid, especially upon cooling, as in the formation of igneous rock from cooled magma or lava.

Erosion

The wearing away of soil, sediment, and rock through the removal of material by running water, waves, currents, ice, wind, and gravity.

Weathering

Physical disintegration and chemical decomposition of rocks, sediment, and soil due to exposure to water and other chemical, atmospheric, and biological agents.

Sediment

Particles of rock, minerals, or organic materials that have been transported and deposited by water, wind, ice, or gravity.