Use the following to answer question:
-(Figure: Tax Incidence)Use Figure: Tax Incidence.Based on the figure,the deadweight loss of an excise tax is likely to be greater in panel _____ than in panel _____.

Question

Use the following to answer question: 
-(Figure: Tax Incidence)Use Figure: Tax Incidence.Based on the figure,the deadweight loss of an excise tax is likely to be greater in panel _____ than in panel _____.

Quizplus · Accepted Answer

Panel C and Panel D both have steeper demand and supply curves than Panel A and Panel B. This means that the tax incidence is greater in Panel C and Panel D, leading to a larger deadweight loss due to the decreased overall quantity of goods and services produced and consumed. Therefore, the best choice is A, as it includes Panel C, the panel with the largest deadweight loss.

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