If a Tax Generates a Reduction in Surplus That Is

question 77

True/False

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

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Definitions:

AVC

Average Variable Cost is the per-unit variable cost of production, which changes with the level of output.

Average Variable Cost

The cost per unit of output that varies directly with the volume of production, excluding fixed costs.

Average Total Cost

The sum expenses incurred in manufacturing, divided by the total units of production.

Total Fixed Costs

The sum of all costs that do not change with the level of output produced, such as rent or salaries.