Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 8 - Part III - Application: The Costs of Taxation - Quick Check Multiple Choice - Page 169: 1

Answer

A

Work Step by Step

Taxes cause a decrease in consumer and producer surplus and an increase in tax revenue. Deadweight loss caused by a tax can be calculated as the reduction in total surplus minus the tax revenue. If the reduction is greater, than there's deadweight loss.
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