Suppose a tax is imposed on a good, this generates a loss in total surplus called:
A)opportunity cost
B)tax evasion
C)deadweight loss
D)public sector employee wages

Question

Quizplus · Accepted Answer

Deadweight loss is the loss in total surplus that is generated when a tax is imposed. This loss is a result of the decrease in consumer and producer surpluses caused by the tax. Option A is incorrect because opportunity cost is the value of the next best alternative that is foregone as a result of making a choice. Option B is also incorrect because tax evasion refers to the illegal nonpayment of taxes. Option D is incorrect because public sector employee wages refer to the salaries paid to government workers and is not related to the loss in total surplus caused by taxation.

Suppose a Tax Is Imposed on a Good, This Generates