When the government imposes taxes on buyers or sellers of a good, society
A)loses some of the benefits of market efficiency.
B)gains efficiency but loses equality.
C)is better off because the government's tax revenues exceed the deadweight loss.
D)moves from an elastic supply curve to an inelastic supply curve.

Question

Quizplus · Accepted Answer

When the government imposes taxes on buyers or sellers of a good, it creates a barrier to efficient market equilibrium. Taxes lead to an increase in the price paid by buyers and a decrease in the price received by sellers, which reduces the quantity traded in the market. Due to this, society loses some of the benefits of market efficiency.

When the Government Imposes Taxes on Buyers or Sellers of a Good