The loss in total surplus resulting from a tax is called?

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1030526

2026-05-06 10:00

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The loss in total surplus resulting from a tax is called deadweight loss. This occurs when the tax causes a reduction in the quantity of goods bought and sold in the market, leading to inefficiencies and a decrease in overall economic welfare. Essentially, deadweight loss represents the lost economic efficiency due to the tax's distortion of consumer and producer behavior.

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