Asked by miriam canela on May 03, 2024
Verified
Briefly describe why taxes create deadweight loss.
Deadweight Loss
An economic inefficiency arising when a good or service fails to meet its free market equilibrium point.
Taxes
Mandatory payments made to the government, taken from individuals' earnings and the profits of businesses, or incorporated into the price of certain products, services, and financial dealings.
- Describe the concept of deadweight loss and its causes.
Verified Answer
JL
Jalisa LumpkinMay 06, 2024
Final Answer :
When the government imposes a tax on a product, buyers and sellers allocate resources according to the tax incentive rather than the true costs and benefits of the good.
Learning Objectives
- Describe the concept of deadweight loss and its causes.