Asked by Leyla Jackson on May 04, 2024
Verified
Deadweight losses arise because a tax causes some individuals to change their behavior.
Deadweight Losses
Economic inefficiencies that occur when the allocation of resources is not optimal, typically due to market imbalances or government interventions.
Tax
A compulsory financial charge or other type of levy imposed on a taxpayer by a governmental organization in order to fund government spending and various public expenditures.
- Identify the impact of administrative burdens and deadweight losses on taxation systems.
Verified Answer
ZK
Zybrea KnightMay 07, 2024
Final Answer :
True
Explanation :
Deadweight losses occur when taxes distort market activities, leading to a reduction in the overall economic efficiency as individuals alter their behavior to minimize their tax burden, resulting in less trade and production than would occur in a tax-free scenario.
Learning Objectives
- Identify the impact of administrative burdens and deadweight losses on taxation systems.
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