If the demand for a good is elastic, the deadweight loss is larger than it would be if demand were inelastic.

Question

Quizplus · Accepted Answer

When demand is elastic, consumers are more sensitive to price changes, meaning a tax or price increase leads to a significant reduction in quantity demanded. This larger reduction in quantity leads to a greater area of deadweight loss, as there are more mutually beneficial trades that do not occur compared to a scenario with inelastic demand, where consumers' quantity demanded is less responsive to price changes.

If the Demand for a Good Is Elastic, the Deadweight