If a per-unit tax is imposed on producers in a market that is in equilibrium,the more elastic demand is,the
A) less likely the deadweight loss will be affected.
B) smaller the deadweight loss.
C) larger the deadweight loss to consumers.
D) smaller the deadweight loss to producers.
E) larger the deadweight loss.

Question

Quizplus · Accepted Answer

The more elastic the demand, the more consumers will reduce their quantity demanded in response to a price increase due to the tax, leading to a larger deadweight loss.

If a Per-Unit Tax Is Imposed on Producers in a Market