Use the following to answer questions :
Figure: Tax Incidence
-(Figure: Tax Incidence)Use Figure: Tax Incidence.Based on the figure,the deadweight loss of an excise tax is likely to be greater in panel _____ than in panel _____.

Question

Use the following to answer questions :
Figure: Tax Incidence 
-(Figure: Tax Incidence)Use Figure: Tax Incidence.Based on the figure,the deadweight loss of an excise tax is likely to be greater in panel _____ than in panel _____.

Quizplus · Accepted Answer

The deadweight loss of an excise tax is greater when either demand or supply is more elastic. Panel 'a' likely represents a more elastic demand or supply curve compared to panel 'b', leading to a larger deadweight loss.

Use the Following to Answer Questions