A tax on a good results in a deadweight loss to society.

Name: A tax on a good results in a deadweight loss to society.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

A tax on a good increases its price, which leads to a decrease in consumer demand and a decrease in producer supply, resulting in a deadweight loss to society. This is because some potential mutually beneficial transactions between producers and consumers are not taking place due to the tax, reducing overall welfare.

A Tax on a Good Results in a Deadweight Loss