The excess burden of a tax is
a. the amount by which the price of a good increases.
b. the loss of consumer and producer surplus that is not transferred elsewhere.
c. The amount by which a person's after-tax income decreases as a result of the new tax.
d. the welfare costs to firms forced to leave the market due to an inward shift of the demand curve.
b
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Answer the following statement true (T) or false (F)
In building a model the assumption that allows economists to study only the factors being analyzed is the
A) rationality assumption. B) ceteris paribus assumption. C) the self-interest assumption. D) the scarcity assumption.
Other things being equal, the lower planned real expenditures along an aggregate demand curve are, the
A. more the production possibilities cure shifts to the left. B. lower the price level. C. lower the level of endowments. D. higher the price level.