Question

As more people become self-employed, which allows them to determine how many hours they work per week, we would expect the deadweight loss from the Social Security tax to

Answer 1

Answer: increase, while the revenue that is generated from the tax would reduce.

Explanation:

Deadweight loss occurs when there's a decline in total surplus which is due to the fact that there's a distortion in the market. Social Security tax is a tax that's imposed by the government on the employers and the workers in the country which is used to cater for the old, disabled, veterans etc.

Based on the scenario in the question, we would expect the deadweight loss from the Social Security tax to increase, while the revenue that is generated from the tax would reduce.