A sales tax creates a deadweight loss because

Name: A sales tax creates a deadweight loss because
Brand: Quizplus
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Question

Quizplus · Accepted Answer

A deadweight loss occurs when there is a reduction in economic efficiency, which happens with a sales tax because it causes the quantity produced and consumed to decrease. This is due to the tax increasing the price for consumers and effectively lowering the price received by producers, leading to a decrease in the quantity of goods traded.

A Sales Tax Creates a Deadweight Loss Because