The more elastic demand is for a taxed good, the smaller the excess burden associated with the tax.

Name: The more elastic demand is for a taxed good, the smaller the excess burden associated with the tax.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The more elastic the demand for a taxed good, the larger the excess burden associated with the tax, because consumers are more responsive to price changes and will significantly reduce their quantity demanded, leading to greater inefficiencies and welfare losses.

The More Elastic Demand Is for a Taxed Good, the Smaller