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Effects of Taxes on a Market
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Problem 10
Effects of Taxes on a Market
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6. Introduction to Taxes and Subsidies / Effects of Taxes on a Market / Problem 3
Problem 3
How can deadweight loss be used to assess the efficiency loss in a market due to taxation?
A
Deadweight loss measures the increase in tax revenue, indicating efficiency gain.
B
Deadweight loss measures the increase in consumer surplus, indicating efficiency gain.
C
Deadweight loss measures the decrease in producer surplus, indicating efficiency gain.
D
Deadweight loss measures the trades that do not occur due to taxation, indicating efficiency loss.
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