If political officials want to minimize the excess burden accompanying a tax, they should set the tax at a rate
A) that will maximize the revenue derived from the tax.
B) slightly above the rate that will maximize the revenue derived from the tax.
C) well below the rate that will maximize the revenue derived from the tax.
D) that is the highest that could possibly be imposed.

Question

Quizplus · Accepted Answer

Setting the tax rate well below the revenue-maximizing rate minimizes the excess burden because it reduces the distortionary effects on economic behavior, such as work, saving, and investment decisions.

If Political Officials Want to Minimize the Excess Burden Accompanying