The loss to society resulting from a tax includes the
A) deadweight loss.
B) consumer surplus paid to the government in the form of tax revenue.
C) producer surplus paid to the government in the form of tax revenue.
D) deadweight loss plus the consumer surplus and producer surplus paid to the government as tax revenue.
E) deadweight loss minus the tax revenue collected by the government.

Question

Quizplus · Accepted Answer

The loss to society resulting from a tax includes the deadweight loss, which represents the reduction in economic efficiency that occurs as a result of the tax. Choices B, C, and D all refer to the tax revenue collected by the government, which is a benefit to the government but not a loss to society. Choice E is not accurate because the tax revenue collected by the government is not subtracted from the deadweight loss to calculate the loss to society.

The Loss to Society Resulting from a Tax Includes the