An excise tax causes inefficiency if the number of transactions in a market is reduced as a result of the tax.Because the tax discourages mutually beneficial transactions,there is a(n) _____ from a tax.

A) quota rent
B) deadweight loss
C) increased consumer surplus
D) increased producer surplus

Question

Brett Sturgis · Accepted Answer

Final Answer : B, Explanation :  An excise tax causes inefficiency in the market, and this inefficiency is measured by the deadweight loss. The tax discourages mutually beneficial transactions, which reduces the number of transactions in the market and results in a deadweight loss. A quota rent refers to a gain or profit that results from a quota, and increased consumer or producer surplus would only be possible if the tax led to a decrease in supply or demand, which is not always the case.

An excise tax causes inefficiency if the number of transactions in a market is reduced as a result of the tax.Because the tax discourages mutually beneficial transactions,there is a(n) _____ from a tax.

A) quota rent
B) deadweight loss
C) increased consumer surplus
D) increased producer surplus

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Learning Objectives

Learning Objectives

Related questions

An excise tax causes inefficiency if the number of transactions in a market is reduced as a result of the tax.Because the tax discourages mutually beneficial transactions,there is a(n) _____ from a tax.A) quota rentB) deadweight lossC) increased consumer surplusD) increased producer surplus

Definitions

Learning Objectives

Learning Objectives

Related questions

An excise tax causes inefficiency if the number of transactions in a market is reduced as a result of the tax.Because the tax discourages mutually beneficial transactions,there is a(n) _____ from a tax.

A) quota rent
B) deadweight loss
C) increased consumer surplus
D) increased producer surplus