Given any downward-sloping demand curve for a good,the more price-elastic the supply curve,the _____ equilibrium output will fall and the _____ will be the deadweight loss when the government imposes an excise tax.

Question

Quizplus · Accepted Answer

When supply is more price-elastic, the equilibrium output will decrease more in response to the tax, which will increase the deadweight loss. Therefore, the deadweight loss will be larger.

Given Any Downward-Sloping Demand Curve for a Good,the More Price-Elastic