One reason why deadweight losses are so difficult to avoid is that:
A)administrative burden and deadweight loss reflect a clear trade-off to policymakers
B)income taxes are not paid by everyone
C)consumption taxes must be universally applied to all commodities
D)taxes affect the decisions that people make

Question

Quizplus · Accepted Answer

Deadweight losses occur when taxes affect the decisions that people make. For example, if a tax is placed on a certain product, consumers may choose to buy less of that product or switch to a cheaper alternative. As a result, the government may collect less revenue than expected, while consumers and producers may experience losses due to the higher prices and reduced trade. It is difficult for policymakers to avoid deadweight losses because taxes are meant to influence behavior and generate revenue, but they may also create unintended consequences that reduce welfare and economic efficiency. In other words, deadweight losses reflect a trade-off between using taxes to achieve social goals and minimizing the distortions they produce.

One Reason Why Deadweight Losses Are So Difficult to Avoid