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10. The deadweight loss of a tax is A) the reduction in economic welfare of taxpayers...

10. The deadweight loss of a tax is

A) the reduction in economic welfare of taxpayers that exceeds the revenue raised by the government.
B) the improved efficiency created as people reallocate resources according to the tax incentive rather than the true costs and benefits.
C) the loss in tax revenues.
D) Both a and b are correct.

11. A value-added tax or VAT is a tax on

A) retail purchases only.
B) wholesale purchases only.
C) pollution.
D) all stages of production of a good.

12. A person's marginal tax rate equals

A) her tax obligation divided by her average tax rate.
B) the increase in taxes she would pay as a percentage of the rise in her income.
C) her tax obligation divided by her income.
D) the increase in taxes if her average tax rate were to rise by 1percent.
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