Asked by
Verified
The deadweight loss from an excise tax is largest if demand is _____ and supply is _____.
A) elastic;inelastic
B) inelastic;elastic
C) inelastic;inelastic
D) elastic;elastic
Deadweight Loss
Deadweight loss is a loss of economic efficiency that can occur when the equilibrium for a good or a service is not achieved or is not achievable, often due to market failures, taxes, or subsidies.
Excise Tax
A tax levied on specific goods or services at purchase such as alcohol, tobacco, and gasoline.
Elastic
Describes a situation in which the demand for a product or service significantly changes in response to a change in its price.
- Apprehend the significance of elasticity in relation to deadweight loss.
- Identify the items that suffer from the least and greatest deadweight loss owing to tax implications.
Verified Answer
Learning Objectives
- Apprehend the significance of elasticity in relation to deadweight loss.
- Identify the items that suffer from the least and greatest deadweight loss owing to tax implications.
Related questions
(Figure: the Market for Music Downloads)Use Figure: the Market for ...
Given Any Upward-Sloping Supply Curve for a Good,the More Elastic ...
Given Any Downward-Sloping Demand Curve for a Good,the More Inelastic ...
Assume the Same Upward Supply Curve for Each of the ...
Excise Taxes That Raise the MOST Revenue and Cause the ...