A tax has an excess burden whenever
A)people are unable to alter their behavior to avoid paying it.
B)government seeks to raise it.
C)it raises a great deal of revenue.
D)it induces people to change their behavior.

Question

Quizplus · Accepted Answer

Excess burden, also known as deadweight loss, is the loss of economic efficiency that occurs when a tax is imposed and it causes people to change their behavior in order to avoid paying it. This can lead to reduced economic activity and welfare, as resources are diverted away from their optimal use. Therefore, a tax that induces people to change their behavior will have an excess burden.

A Tax Has an Excess Burden Whenever