Suppose the government places a tax on business profits so that businesses decrease production and generate a deadweight loss.Revenues from the tax are used to boost the incomes of the poor.The decision to levy the tax implies that in this case the government

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The decision to levy the tax, despite the deadweight loss it creates, shows that the government values its view of fairness (redistributing income to the poor) more than efficiency. This implies that the government is willing to sacrifice some economic output in order to achieve its desired distributional outcome.

Suppose the Government Places a Tax on Business Profits So