When the imposition of an excise tax causes the quantity demanded and quantity supplied to decrease relative to the no-tax equilibrium,this will result in:

Question

Quizplus · Accepted Answer

When the imposition of an excise tax causes the quantity demanded and quantity supplied to decrease relative to the no-tax equilibrium, this leads to a decrease in both consumer and producer surplus. This loss of surplus is known as deadweight loss, which is a measure of the inefficiency caused by the tax. Therefore, the best choice is A.

When the Imposition of an Excise Tax Causes the Quantity