Deadweight Loss Measures the Loss

question 60

Multiple Choice

Deadweight loss measures the loss

• A)in a market to buyers and sellers that is not offset by an increase in government revenue.
• B)in revenue to the government when buyers choose to buy less of the product because of the tax.
• C)of equality in a market due to government intervention.
• D)of total revenue to business firms due to the price wedge caused by the tax.

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Definitions:

Prices of Resources

Refers to the cost associated with the inputs required for production, including labor, capital, and materials.

Determinant of Supply

Factors that influence the quantity of a good or service that producers are willing and able to sell at a given price, such as production technology, input prices, and expectations of future prices.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers.

Excise Tax

A tax levied on specific goods, services, or transactions, often specific types of products such as gasoline, cigarettes, or alcohol.