Asked by
ieyra bulkia
on Dec 17, 2024
Verified
The more elastic are supply and demand in a market, the greater are the distortions caused by a tax on that market, and the more likely it is that a tax cut in that market will raise tax revenue.
Elastic
Describes a situation in which a change in price leads to a significant change in the quantity demanded or supplied of a good or service.
Supply
The total amount of a good or service that is available to consumers at a given price level and time.
Demand
The desire and ability of consumers to purchase a good or service at a given price.
- Examine how the elasticity of demand and supply influences the market distortions resulting from taxes.
- Understand the influence of market elasticity on deadweight loss and taxation revenue identification.
Verified Answer
DS
Learning Objectives
- Examine how the elasticity of demand and supply influences the market distortions resulting from taxes.
- Understand the influence of market elasticity on deadweight loss and taxation revenue identification.