The cost to society resulting from taxation to finance government spending is called: Group of answer choices deadweight loss. price transparency. price discrimination. third-party payers. GDP.
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When the government levies a seller tax on a good whose market demand is perfectly inelastic (and the market supply curve of this good is upward sloping as usual): 1. the entire tax burden falls on to the sellers of this good and there is no deadweight loss. 2. the entire tax burden falls on to the buyers of this good and there is no deadweight loss. 3. the entire tax burden falls on to the sellers of this good and there is deadweight loss. 4. the entire tax burden falls on to the buyers of this good and there is deadweight loss. 5. None of the above choices is correct.
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Example of Deadweight loss with explanation
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Economists disagree on whether labor taxes cause small or large deadweight losses. This disagreement arises primarily because economists hold different views about the size of labor taxes. the importance of labor taxes imposed by the federal government relative to the importance of labor taxes imposed by the various states. the elasticity of labor demand. the elasticity of labor supply.
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