The deadweight loss of a tariff is
A) a welfare loss since it promotes inefficient production.
B) a welfare loss since it reduces the revenue for the government.
C) not a welfare loss because society as a whole doesn't pay for the loss.
D) not a welfare loss since only business firms suffer revenue losses.

Question

Quizplus · Accepted Answer

Deadweight loss is a welfare loss since it represents inefficiency in production and exchange. It exists when the quantity of a good demanded and supplied is lower than that which would exist in a free market, resulting in a loss of consumer and producer surplus. Tariffs can cause deadweight loss by reducing the amount of imports, thereby promoting inefficient domestic production.

The Deadweight Loss of a Tariff Is