The deadweight loss of a tariff
A) is a social loss because it promotes inefficient use of national resources.
B) is a social loss because it reduces the revenue of the government.
C) is not a social loss because it merely redistributes revenue from one sector to another.
D) is not a social loss because it is paid for by rich corporations.
E) is not a social loss because it aids domestic consumers.

Question

Quizplus · Accepted Answer

The deadweight loss of a tariff is a social loss because it creates an inefficient allocation of resources by interfering with the natural flow of trade. This leads to increased production costs and higher prices for consumers, which reduces overall economic welfare. Tariffs do not promote efficient resource allocation, making them a social loss in the long run.

The Deadweight Loss of a Tariff