When a tax distorts incentives to buyers and sellers so that fewer goods are produced and sold than otherwise, the tax has

Name: When a tax distorts incentives to buyers and sellers so that fewer goods are produced and sold than otherwise, the tax has
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Question

Quizplus · Accepted Answer

A tax causing fewer goods to be produced and sold than otherwise is a market inefficiency and results in a deadweight loss. This loss of consumer and producer surplus represents a net loss to society that reduces economic efficiency.

When a Tax Distorts Incentives to Buyers and Sellers So