Deadweight loss as a result of taxation occurs because the:

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Deadweight loss occurs when the quantity of a good that is bought and sold is below the market equilibrium quantity. This happens when taxes increase the cost of production, leading to higher prices for consumers and lower profits for producers. As a result, some consumers may decide not to buy the good at the higher price, while some producers may choose not to produce as much due to lower profits. This results in a loss of economic activity and efficiency that is not captured by the tax revenue collected by the government.

Deadweight Loss as a Result of Taxation Occurs Because The