Use the following to answer questions:
Figure: Tax Incidence
-(Figure: Tax Incidence) Look at the 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 questions:
Figure: Tax Incidence 
-(Figure: Tax Incidence) Look at the 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

The deadweight loss of an excise tax is greater when the supply and demand are more elastic, as shown in panel A compared to panel B where they are more inelastic.

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