Suppose an excise tax is imposed on two products X and Y, both of which have identical supply elasticities. The demand for good X is highly elastic, while the demand for good Y is highly inelastic. The deadweight loss (or excess burden) will be

A) equal in both cases.
B) larger for good X than good Y.
C) larger for good Y than good X.
D) zero in both cases.

Deadweight Loss

A loss of economic efficiency that occurs when the optimal level of supply and demand is not achieved.

Supply Elasticities

Measures the responsiveness of the quantity supplied of a good to a change in its price.

Excise Tax

A tax imposed on specific goods, services, or transactions, often used to discourage consumption of certain products or to raise government revenue.