This graph illustrates the market for groceries with and without a per unit tax:
The deadweight loss of this tax is

Question

This graph illustrates the market for groceries with and without a per unit tax: 
The deadweight loss of this tax is

Quizplus · Accepted Answer

The deadweight loss of a tax is the loss of economic efficiency that occurs when the tax reduces the quantity sold below the efficient market equilibrium quantity. In this case, the tax increases the price paid by consumers and lowers the price received by sellers, which reduces the quantity sold. However, because the market for groceries is relatively inelastic (consumers do not significantly change their consumption of groceries in response to a change in price), the reduction in quantity sold is relatively small. Therefore, the deadweight loss of the tax is relatively small as well.

This Graph Illustrates the Market for Groceries with and Without