Asked by
Mackenzie Porter
on Nov 26, 2024Verified
The efficiency loss of a tax is the idea that
A) in addition to taking income from the citizenry, taxes also increase the rate of inflation.
B) taxes cause a decline in output for which marginal benefit exceeds marginal cost.
C) taxes diminish incentives to work.
D) government spends dollars less efficiently than do households and businesses.
Efficiency Loss
The decrease in economic efficiency that occurs when market conditions prevent the optimal allocation of resources, often caused by market failures or interventions.
Tax
A compulsory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.
Marginal Benefit
The extra utility or satisfaction gained from the utilization or creation of one more unit of a product or service.
- Evaluate the reduction in efficiency resulting from taxation and comprehend the factors influencing its extent.
Verified Answer
PM
Learning Objectives
- Evaluate the reduction in efficiency resulting from taxation and comprehend the factors influencing its extent.