Influence of taxes on the efficiency of resource use.
Explanation of Solution
The tax will reduce the efficiency because taxes are the burden imposed by the government on its citizens on the consumption of goods and services. If the burden is imposed on the society as tax, it will lead to problems such as compliance cost and dead weight loss. The compliance cost arises due to the cost of collecting tax. The dead weight loss arises due to the imposition of tax, which reduces the producer and
Dead weight loss: Dead weight loss is a loss of economic efficiency that arises due to the allocative inefficiency when the goods and services are unable to achieve the market equilibrium.
Want to see more full solutions like this?
Chapter ST1 Solutions
MACROECONOMICS-W/MINDTAP
- How can the government improve tax collections without imposing much tax to the consumer?arrow_forwardWhere does our taxes goes? What are the things that the government do to our taxes? Who are those people involved in a certain government projects?arrow_forwardDo you think profit could be maintained if the tax burden were simply passed on to the consumers in the form of higher selling price? How will this affect sales? Explain.arrow_forward
- Macroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506756Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage LearningEconomics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage LearningMicroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
- Principles of Microeconomics (MindTap Course List)EconomicsISBN:9781305971493Author:N. Gregory MankiwPublisher:Cengage LearningPrinciples of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning