Asked by

Ashlyn Gordon
on Nov 26, 2024

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The efficiency loss of a tax is

A) the net value of sacrificed output caused by the tax.
B) that portion of the tax paid by producers minus the portion paid by consumers.
C) that portion of the tax paid by consumers minus the portion paid by producers.
D) the total tax revenue minus the output loss caused by the tax.

Efficiency Loss

The decrease in economic efficiency resulting from the inability to reach or achieve the equilibrium for a product or service.

Sacrificed Output

The production or output that is given up as a consequence of choosing one option over another, often discussed in opportunity cost analysis.

Tax

A compulsory financial charge or other levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

  • Appraise the erosion of efficiency caused by taxes and discern the conditions that dictate its magnitude.
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JG
Julianne GomezDec 01, 2024
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