Question 6: The excess burden, or deadweight loss, of taxation reflects: O the social benefit of the government spending funded by the revenue from the tax. O the degree to which taxes are born by buyers rather than sellers. O the losses in tax revenue resulting from tax evasion by consumers and producers. Olosses to buyers and sellers over and above the amount of tax revenue paid.
Question 6: The excess burden, or deadweight loss, of taxation reflects: O the social benefit of the government spending funded by the revenue from the tax. O the degree to which taxes are born by buyers rather than sellers. O the losses in tax revenue resulting from tax evasion by consumers and producers. Olosses to buyers and sellers over and above the amount of tax revenue paid.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Question 6:
The excess burden, or deadweight loss, of taxation reflects:
the social benefit of the government spending funded by the revenue from the tax.
the degree to which taxes are born by buyers rather than sellers.
the losses in tax revenue resulting from tax evasion by consumers and producers.
losses to buyers and sellers over and above the amount of tax revenue paid.
Transcribed Image Text:Question 7:
When economists state that individuals make rational choices, they mean:
O individuals always make the right choice that improves their health and longevity.
O most consumer decisions require individuals to spend a long time doing substantial background research.
price is generally less relevant than benefit when an individual makes decisions.
O individuals compare the expected benefits and costs of actions when making decisions.
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- The excess burden of taxation, also known as the deadweight loss of taxation, refers to the economic inefficiency that results from taxes being imposed on goods, services, or income. The excess burden of taxation can be reduced by designing taxes that minimize these distortions. This can be achieved through tax reform efforts, such as lowering tax rates, simplifying tax codes, broadening tax bases, and eliminating special tax preferences.
- Rational choice is a theory that assumes individuals are rational and will make decisions that maximize their own self-interest. This theory is commonly applied in economics, where it is used to explain consumer behavior, market dynamics, and other economic phenomena.
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