The government wants to levy a $1 excise tax on a product but wants to minimize the deadweight loss.The deadweight loss will be LEAST when the demand curve is _____ and the supply curve is _____.

Question

Quizplus · Accepted Answer

Deadweight loss is minimized when both demand and supply are inelastic because the quantity traded in the market changes very little, resulting in a smaller loss of economic efficiency.

The Government Wants to Levy a $1 Excise Tax on a Product