The deadweight loss of taxation may be less than supply and demand analysis suggests as some economic activity may be forced "under the table" where it is not counted in official figures.

Question

Quizplus · Accepted Answer

This is correct. When economic activity is forced "under the table" due to taxation, it is not accounted for in official figures, leading to a lower deadweight loss than predicted by supply and demand analysis.

The Deadweight Loss of Taxation May Be Less Than Supply