The greater the elasticities of demand and supply the:
A)smaller the deadweight loss from a tax
B)less intrusive a tax will be on a market
C)greater the deadweight loss from a tax
D)more equitable the distribution of a tax between buyers and sellers

Question

Quizplus · Accepted Answer

The greater the elasticities of demand and supply, the more responsive they are to changes in price. Therefore, a tax will create a larger distortion in the market, leading to a greater deadweight loss.

The Greater the Elasticities of Demand and Supply The