Taxes create deadweight loss when they
A)distort behavior.
B)cause the price of the product to increase.
C)don't raise sufficient government revenue.
D)cannot be computed easily.

Question

Quizplus · Accepted Answer

Deadweight loss occurs when taxes distort behavior by causing individuals to act in a way that is not efficient or optimal. This can lead to a reduction in economic activity and overall welfare. Therefore, choice A is the best answer. B and C are partially correct, but do not encompass the full concept of deadweight loss. D is not correct as the ease of computation does not necessarily impact deadweight loss.

Taxes Create Deadweight Loss When They