ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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deadweight loss
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consumer surplus loss
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the law of producer distortion
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Criss Angel Effect
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Detailed explanation-1: -Answer and Explanation: The decrease in total surplus that results from a market distortion, such as a tax, is called a deadweight loss. A tax creates a deadweight loss in a market. This is because the revenue gained by the government from the tax is lower than the loss in producer and consumer surpluses.
Detailed explanation-2: -A deadweight loss is a cost to society created by market inefficiency, which occurs when supply and demand are out of equilibrium. Mainly used in economics, deadweight loss can be applied to any deficiency caused by an inefficient allocation of resources.
Detailed explanation-3: -deadweight loss: the fall in total surplus that results from a market distortion, such as a tax.
Detailed explanation-4: -Deadweight loss of taxation measures the overall economic loss caused by a new tax on a product or service. It analyses the decrease in production and the decline in demand caused by the imposition of a tax. It is a lost opportunity cost.