A Toy Boat Is Floating on a Small Pond

question 38

Essay

A toy boat is floating on a small pond. If you threw a rock behind the boat (and thus created a wave), would the boat move forward? Why or why not?

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Definitions:

Deadweight Loss

The reduction in economic efficiency that happens when a good or service does not reach or cannot reach its equilibrium.

Efficient Tax System

A tax system that collects required revenue without excessive government borrowing, and does so in a way that does not impede economic growth.

Tax Revenues

The income that is received by the government from taxpayers, including individuals and businesses, to fund public expenditures.

Deadweight Loss

The loss of economic efficiency that can occur when the equilibrium for a good or a service is not achieved or is not achievable.