Asked by
Penny For Your Thoughts
on Nov 17, 2024
Verified
If the size of a tax triples, the deadweight loss increases by a factor of six.
Deadweight Loss
An economic inefficiency that occurs when the market outcome does not maximize total benefits, often due to distortions such as taxes, subsidies, or monopolies.
Tax
A mandatory financial charge imposed by a governmental organization in order to fund various public expenditures.
- Gain an understanding of how taxes create deadweight loss and the repercussions this has on market effectiveness.
- Grasp the link between the scale of taxation, fiscal receipts, and loss of economic efficiency.
Verified Answer
CG
Learning Objectives
- Gain an understanding of how taxes create deadweight loss and the repercussions this has on market effectiveness.
- Grasp the link between the scale of taxation, fiscal receipts, and loss of economic efficiency.