The excess burden of a tax
A)measures the efficiency loss to the economy that results from a tax, causing a reduction in the quantity of goods and services produced.
B)is measured by the administrative costs required to implement a tax system.
C)is a measure of the hardship imposed on low-income individuals in a society.
D)is a measure of the foregone consumption as a result of having to pay taxes.

Question

Quizplus · Accepted Answer

The excess burden of a tax measures the efficiency loss to the economy that results from a tax, causing a reduction in the quantity of goods and services produced. This is because taxes distort incentives and alter behavior in ways that reduce economic efficiency. The excess burden is also known as deadweight loss.

The Excess Burden of a Tax