Figure 8-16

-Refer to Figure 8-16.Suppose the government imposes a $1 tax in each of the four markets represented by supply curves S1,S2,S3,and S4.The deadweight will be the smallest in the market represented by

Question

Figure 8-16
 
-Refer to Figure 8-16.Suppose the government imposes a $1 tax in each of the four markets represented by supply curves S1,S2,S3,and S4.The deadweight will be the smallest in the market represented by

Quizplus · Accepted Answer

The deadweight loss from a tax is smaller in markets with inelastic supply. S1 represents the most inelastic supply curve, leading to the smallest deadweight loss when a tax is imposed.

Figure 8-16 -Refer to Figure 8-16.Suppose the Government Imposes a $1 Tax