The excess burden of an excise tax is
A)greater the more inelastic the supply curve.
B)greater the more elastic the demand curve.
C)smaller the more elastic the supply curve.
D)greater the more inelastic the demand curve.

Question

Quizplus · Accepted Answer

The excess burden, or deadweight loss, of an excise tax is greater when the demand curve is more elastic because consumers are more responsive to price changes, leading to larger reductions in quantity traded.

The Excess Burden of an Excise Tax Is