The size of the tax and the deadweight loss of a tax are
A. . positively related.
B. . negatively related.
C. . independent of each other.
D. . equal to each other.
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The amount of deadweight loss that will result from a tax is determined by the
A. . price elasticity of demand and supply.
B. . number of buyers of the product in the market.
C. . number of suppliers of the product in the market.
D. . percentage of the purchase price the tax amounts to.
A tax has a deadweight loss because
A. . it induces the government to spend more.
B. . it induces buyers to consume less and sellers to produce less.
C. . it causes a disequilibrium in the market.
D. . the loss to buyers is greater than the loss to sellers.
Deadweight loss is the
A. . reduction in total surplus that results from a tax.
B. . loss of profit to businesses when a tax is imposed.
C. . reduction in consumer surplus when a tax is placed on buyers.
D. . decline in government revenue when taxes are reduced in a market.
When the government places a tax on a product
A. . the cost of the tax to buyers and sellers will be less than the revenue raised from the tax by the government.
B. . the cost of the tax to buyers and sellers will equal the revenue raised from the tax by the government.
C. . the cost of the tax to buyers and sellers exceeds the revenue raised from the tax by the government.
D. . without additional information, such as the elasticity of demand for this product, it is impossible to compare tax cost with tax revenue.
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