Asked by Aracelli Garcia on May 06, 2024
Verified
Deadweight losses and administrative burdens are key factors considered when determining the efficiency of the tax system.
Deadweight Losses
Economic inefficiencies that occur when the free market equilibrium is disturbed, resulting in a loss of economic value, often due to taxes, subsidies, or price controls.
Administrative Burdens
The costs and obstacles associated with compliance to legal and regulatory requirements by businesses or individuals.
- Acknowledge the theory and repercussions of deadweight loss associated with taxation.
- Comprehend the administrative challenges and inefficiencies inherent in tax systems.
Verified Answer
AO
Adaku OnwukaMay 09, 2024
Final Answer :
True
Explanation :
Deadweight losses refer to the reduction in economic efficiency that can occur when the equilibrium for a good or a service is not achieved, often due to taxes distorting market behavior. Administrative burdens are the costs associated with managing and complying with tax laws. Both are crucial in evaluating the efficiency of a tax system, as they impact the overall economic welfare and the ease with which taxes can be implemented and collected.
Learning Objectives
- Acknowledge the theory and repercussions of deadweight loss associated with taxation.
- Comprehend the administrative challenges and inefficiencies inherent in tax systems.