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Author Question: When would a tax be efficient? What will be an ideal response?[br][br][b][color=red]Question ... (Read 35 times)

melly21297

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on: Jun 29, 2018
When would a tax be efficient?
 
  What will be an ideal response?

Question 2

Suppose that in 2016, the national income in the United States was 200 billion, depreciation was 15 billion, personal taxes were 20 billion, and transfer payments were 10 billion. Gross domestic product in 2016 is
 
  A) 185 billion. B) 215 billion. C) 220 billion. D) 245 billion.


CourtneyCNorton

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Reply #1 on: Jun 29, 2018
Answer to Question 1

A tax is efficient, that is, creates no deadweight loss, when demand is perfectly inelastic or supply is perfectly inelastic. In both these cases a tax does not change the quantity produced and so creates no deadweight loss.

Answer to Question 2

B


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