Asked by
Beatriz Leite
on Nov 17, 2024
Verified
The deadweight loss from a tax per unit of good will be smallest in a market with
A) inelastic supply and elastic demand.
B) inelastic supply and inelastic demand.
C) elastic supply and elastic demand.
D) elastic supply and inelastic demand.
Inelastic Supply
A situation where the quantity supplied of a good is not significantly affected by a change in price.
Elastic Demand
A market condition where the demand for a product is sensitive to price changes, meaning that a small change in price results in a large change in the quantity demanded.
Deadweight Loss
A loss in economic efficiency that occurs when the optimal quantity of a good or service is not produced or traded.
- Comprehend the principle of deadweight loss and identify its origins within the framework of taxation.
- Assess the impact of how flexible demand and supply are on the magnitude of deadweight loss.
Verified Answer
BF
Learning Objectives
- Comprehend the principle of deadweight loss and identify its origins within the framework of taxation.
- Assess the impact of how flexible demand and supply are on the magnitude of deadweight loss.