To fully understand how taxes affect economic well-being,we must compare the
A)consumer surplus to the producer surplus.
B)price paid by buyers to the price received by sellers.
C)reduced welfare of buyers and sellers to the revenue raised by the government.
D)consumer surplus to the deadweight loss.

Question

Quizplus · Accepted Answer

To fully understand how taxes affect economic well-being, we need to compare the reduction in welfare of both buyers and sellers due to the tax to the revenue generated by the government. This is because taxes lead to a decrease in both consumer and producer surplus, resulting in a net loss of economic well-being. Comparing this loss to the revenue raised by the government helps us understand the overall impact of the tax on the economy. Options A, B, and D are not comprehensive enough to fully understand the impact of taxes on economic well-being.

To Fully Understand How Taxes Affect Economic Well-Being,we Must Compare