Respond Economics

Agree or disagee with post 2 citations required no plagerisim please strict teacher

Healthy competition among businesses is needed for a thriving market. Unfortunately, it is inevitable to experience loss when making business ventures, whether it is through government setbacks or simply by making poor decisions. Boyce describes deadweight loss as when a trade is not made due to a disequilibrium in supply and demand, a reduction in the producer or consumer surplus, and is typically a result of government intervention that has shifted the supply and demand curve, (Boyce, 2021). A common example of experiencing a deadweight loss is an oversupply in the market. If a baker has a surplus of bread and only sells 80 percent of his product that day, the other 20 percent of the bread will rot and become a loss. As mentioned by Boyce, dead wight loss is often the result of government policies such as price floors, price ceilings, taxation, and subsidies, altering the incentives for the producer to supply and the consumer to demand, (Boyce, 2021).
For the local economy to flourish, it is essential for the government intervention of taxes to create revenue. Along with taxes comes the burden of bearing them. Understanding the division of a tax burden between stakeholders is described by Kagan as tax incidence, (Kagan 2021). Price elasticity plays a key role in understanding tax incidence among parties. According to Kagan, when supply is more elastic than demand, the tax burden falls on the buyers, alternatively, if the demand is more elastic than supply, producers will bear the cost of the tax, (Kagan, 2021). Possessing a firm understanding of deadweight loss and its causes, along with balancing tax incidence will yield a healthy reputation in a competitive market environment.
References:
Boyce, P. (2021, April 14). Deadweight loss Definition (3 examples And causes). BoyceWire. https://boycewire.com/deadweight-loss-definition-and-examples/.
Kagan, J. (2021, May 19). Understanding tax incidence. Investopedia. https://www.investopedia.com/terms/t/tax_incidence.asp.
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