The deadweight loss from an excise tax comes about because:

Question

Quizplus · Accepted Answer

The deadweight loss from an excise tax occurs because the tax reduces the number of transactions in the market and prevents some mutually beneficial transactions from taking place. This results in a loss of economic efficiency and overall welfare. Choice A is partially correct but does not capture the full impact of the tax on mutually beneficial transactions. Choices B and C are not directly related to the concept of deadweight loss.

The Deadweight Loss from an Excise Tax Comes About Because