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Suppose That the Government Imposes a Tax on Dairy Products

Question 259

Multiple Choice

Suppose that the government imposes a tax on dairy products.The deadweight loss from this tax will likely be greater in the


A) first year after it is imposed than in the fifth year after it is imposed because demand and supply will be more elastic in the first year than in the fifth year.
B) first year after it is imposed than in the fifth year after it is imposed because demand and supply will be less elastic in the first year than in the fifth year.
C) fifth year after it is imposed than in the first year after it is imposed because demand and supply will be more elastic in the first year than in the fifth year.
D) fifth year after it is imposed than in the first year after it is imposed because demand and supply will be less elastic in the first year than in the fifth year.

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