Because taxes distort incentives, they cause markets to allocate resources inefficiently.

Name: Because taxes distort incentives, they cause markets to allocate resources inefficiently.
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Question

Quizplus · Accepted Answer

Taxes can distort incentives by making certain activities more expensive or less profitable, leading to changes in behavior and potentially causing markets to allocate resources in ways that are not as efficient as they would be in the absence of taxes.

Because Taxes Distort Incentives, They Cause Markets to Allocate Resources