Asked by Kiera Turner on Jun 17, 2024
Verified
When the government imposes taxes on buyers and sellers of a good, society loses some of the benefits of market efficiency.
Market Efficiency
A scenario where all existing information is entirely accounted for in the prices of assets, rendering it impossible to consistently outperform the market average in terms of returns.
Government
An organized system that establishes rules and regulations, governs, and provides services to its constituents.
Taxes
Essential fees levied by authorities on personal and corporate income, or added onto the costs of selected merchandise, services, and operations.
- Master the idea of deadweight loss that arises from taxes and its influence on the efficiency of the marketplace.
Verified Answer
BC
Brianna Cieslak
Jun 20, 2024
Final Answer :
True
Explanation :
Taxes on buyers and sellers lead to a decrease in market activity, causing a loss in consumer and producer surplus, which results in a deadweight loss, reflecting the loss of market efficiency.
Learning Objectives
- Master the idea of deadweight loss that arises from taxes and its influence on the efficiency of the marketplace.