Answer:
The correct answer is C) equal to.
Explanation:
One of the Ten Principles of the economy is that individuals respond to incentives, and this includes those offered by the tax system. If the government taxes cream ice cream with a tax, people eat less cream ice cream and more yogurt ice cream. If the government taxes housing, people live in smaller houses and spend a greater part of their income on other things. If the government taxes wages, people work less and rest more.
Because taxes distort incentives, they cause deadweight losses. As studied in another article, the loss of deadweight caused by a tax is the reduction of the economic well-being of taxpayers that exceeds the amount of income obtained by the government. The loss of deadweight is the inefficiency that creates a tax when people distribute their resources based on the tax incentive instead of taking into account the true costs and benefits of the goods and services they buy and sell.
