The appropriate measure of the benefit from a tax is the:
A)consumer surplus
B)benefit received by those people who gain from government's expenditure of the tax revenue
C)producer surplus
D)government's budget balance, which is increased with more taxes

Question

Quizplus · Accepted Answer

The appropriate measure of the benefit from a tax is the benefit received by those people who gain from government's expenditure of the tax revenue. This is because taxes are collected by the government in order to finance public goods and services that benefit society as a whole, and thus the benefits of taxation should be measured by the value of the public goods and services provided by the government. Consumer surplus and producer surplus are measures of the benefits received by consumers and producers from market transactions, and are not directly related to the benefits of taxation. The government's budget balance is a measure of the government's financial position and is not directly related to the benefits of taxation.

The Appropriate Measure of the Benefit from a Tax Is