As demand becomes more elastic, ceteris paribus, the deadweight loss from a tax:
A) increases.
B) remains the same.
C) decreases.
D) changes unpredictably.

Question

Quizplus · Accepted Answer

When demand becomes more elastic, a tax will have a larger effect on consumer behavior, causing a greater reduction in quantity demanded and a greater deadweight loss. Therefore, as demand becomes more elastic, the deadweight loss from a tax increases.

As Demand Becomes More Elastic, Ceteris Paribus, the Deadweight Loss