The imposition of all taxes,except Pigouvian taxes,leads to ________.

Question

Quizplus · Accepted Answer

The imposition of all taxes except Pigouvian taxes leads to a loss in total welfare because it results in a deadweight loss caused by the reduction in consumer surplus and producer surplus. This deadweight loss leads to a net loss in total surplus, resulting in a loss in total welfare. Therefore, option D is correct. Options A and B are incorrect because the imposition of taxes does not necessarily result in an increase in consumer or producer surplus. Option C is also incorrect because the price of the good can either fall or rise depending on the elasticity of demand and supply.

The Imposition of All Taxes,except Pigouvian Taxes,leads to ________