Figure 8-13
-Refer to Figure 8-13.Panel (a) and Panel (b) each illustrate a $4 tax placed on a market.In comparison to Panel (a) ,Panel (b) illustrates which of the following statements?
A) When demand is relatively inelastic, the deadweight loss of a tax is smaller than when demand is relatively elastic.
B) When demand is relatively elastic, the deadweight loss of a tax is larger than when demand is relatively inelastic.
C) When supply is relatively inelastic, the deadweight loss of a tax is smaller than when supply is relatively elastic.
D) When supply is relatively elastic, the deadweight loss of a tax is larger than when supply is relatively inelastic.
Correct Answer:
Verified
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