The total amount of surplus lost due to taxation is:

Question

Quizplus · Accepted Answer

Surplus is the difference between the price consumers are willing to pay and the price producers are willing to accept. Taxation decreases the surplus because it increases the price consumers pay and decreases the price producers receive. The amount of surplus lost due to taxation is greater than the amount of revenue generated because some of the tax revenue goes towards administrative costs and enforcement, which represent a deadweight loss to society.

The Total Amount of Surplus Lost Due to Taxation Is