Suppose the government considers imposing a tax on two types of goods: luxury goods and necessity goods. Luxury goods have a higher elasticity of demand than necessity goods. Does a tax on luxury goods have a greater deadweight loss than a tax on necessity goods?

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The Answer of Suppose the government considers imposing a tax on two types of goods: luxury goods and necessity goods. Luxury goods have a higher elasticity of demand than necessity goods. Does a tax on luxury goods have a greater deadweight loss than a tax on necessity goods?

Suppose the Government Considers Imposing a Tax on Two Types