Deadweight loss is the
A)decline in total surplus that results from a tax.
B)decline in government revenue when taxes are reduced in a market.
C)decline in consumer surplus when a tax is placed on buyers.
D)loss of profits to business firms when a tax is imposed.

Question

Quizplus · Accepted Answer

Deadweight loss is the decline in total surplus that results from a tax. It is the loss of economic efficiency that occurs when the equilibrium for a good or service is not achieved, leading to a reduced output and higher prices. This reduction in output and higher prices results in a decline in total surplus.

Deadweight Loss Is the