How are the size of the tax and the deadweight loss of a tax related
A)positively related
B)negatively related
C)independent of each other
D)equal to each other

Question

Quizplus · Accepted Answer

The size of the tax and deadweight loss of a tax are positively related. This means that as the tax increases, the deadweight loss also increases. This is because as the tax increases, it becomes more expensive for consumers to purchase goods and services, which reduces their willingness and ability to purchase. As a result, there is a reduction in economic activity, leading to a deadweight loss.

How Are the Size of the Tax and the Deadweight