What does deadweight loss represent
A)the reduction in total surplus that results from a tax
B)the loss of profit to businesses when a tax is imposed
C)the reduction in producer surplus when a tax is placed on buyers
D)the decline in government revenue when taxes are reduced in a market

Question

Quizplus · Accepted Answer

Deadweight loss represents the reduction in total surplus that results from a tax. It is the loss of economic efficiency that occurs when the equilibrium for a good or service is not achieved or is lost due to market interventions such as taxes. Deadweight loss measures the sum of lost consumer and producer surplus due to a tax.

What Does Deadweight Loss Represent