When a tax is imposed, the surplus that is lost to buyers and sellers but converted into tax revenue is:

Question

Quizplus · Accepted Answer

The surplus lost to buyers and sellers but converted into tax revenue is not part of deadweight loss. Deadweight loss refers to the inefficiency caused by a tax, where the total surplus (consumer plus producer surplus) is reduced beyond the tax revenue generated. The portion of surplus converted into tax revenue is still part of the economy's total surplus, just reallocated to the government, and thus not considered a deadweight loss.

When a Tax Is Imposed, the Surplus That Is Lost