Governments redistribution function leads to dead weight losses because:

CA Foundation · Business Economics · PYQS · January 2026
Governments redistribution function leads to dead weight losses because:
(A) A. It leads to lower taxes on the rich for the government
(B) B. It emphasizes on production of merit goods only
(C) C. It acts as a disincentive to entrepreneurship and work
(D) D. It decreases social security costs

Suggested Answer and Working Notes:

Correct Answer: Option (C)

C. It acts as a disincentive to entrepreneurship and work

Topics: Public Finance

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