The net loss to society from a tax on a product can be measured as:
A)the loss in consumer surplus.
B)the loss in producer surplus.
C)the loss in both consumer and producer surplus.
D)the difference between the loss in consumer and producer surplus and the gain in tax revenue.

Question

The net loss to society from a tax on a product can be measured as:​
A)​the loss in consumer surplus.
B)​the loss in producer surplus.
C)​the loss in both consumer and producer surplus.
D)​the difference between the loss in consumer and producer surplus and the gain in tax revenue.

Quizplus · Accepted Answer

The net loss to society, or deadweight loss, is the loss in consumer and producer surplus that is not offset by the gain in tax revenue.

The Net Loss to Society from a Tax on a Product