Asked by Braeden Boehlecke on Mar 10, 2024
Verified
If a tax system is designed to minimize the sum of its deadweight loss and its administrative cost,its principal goal is:
A) maximizing efficiency.
B) maximizing equity.
C) maximizing revenue.
D) minimizing the tax burden.
A) maximizing efficiency.
B) maximizing equity.
C) maximizing revenue.
D) minimizing the tax burden.
Deadweight Loss
A loss of economic efficiency that occurs when the equilibrium outcome is not achievable or not achieved in a market.
Administrative Cost
Expenses related to the general operation of a business, including office supplies, salaries of non-production staff, and rent.
Efficiency
The extent to which resources are utilized to their maximum potential, minimizing waste and maximizing output or outcomes.
- Discern the basic tenets of tax formulation aimed at mitigating the economic burden.
- Understand the administrative costs and deadweight loss associated with taxation.
Verified Answer
SG
Stacie Garcia
Mar 10, 2024
Final Answer :
A
Explanation :
Minimizing the sum of deadweight loss and administrative cost would result in a more efficient tax system, where resources are not wasted and the economy is not distorted by excessive taxation or inefficient administration. Maximizing equity or revenue or minimizing the tax burden may not necessarily lead to the most efficient tax system.
Learning Objectives
- Discern the basic tenets of tax formulation aimed at mitigating the economic burden.
- Understand the administrative costs and deadweight loss associated with taxation.