The excess burden of a tax reflects a reduction of

Name: The excess burden of a tax reflects a reduction of
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The excess burden of a tax, also known as deadweight loss, reflects the reduction of total economic surplus. This means that the tax causes a loss in consumer and producer surplus beyond the tax revenue collected by the government. It also leads to allocative inefficiency, as the tax distorts market outcomes and leads to a misallocation of resources. Therefore, option C is the correct choice.

The Excess Burden of a Tax Reflects a Reduction of