Other things being equal, the less elastic demand is:
A)the lower the deadweight loss is resulting from the imposition of a given tax on a product.
B)the greater the burden is of the tax borne by consumers.
C)the greater the tax revenue collected by the government is.
D)all of the above

Question

Other things being equal, the less elastic demand is:
A)​the lower the deadweight loss is resulting from the imposition of a given tax on a product.
B)​the greater the burden is of the tax borne by consumers.
C)​the greater the tax revenue collected by the government is.
D)​all of the above

Quizplus · Accepted Answer

When demand is less elastic, consumers are less responsive to price changes, meaning they will continue to buy the product even when the price increases due to a tax. This results in a lower deadweight loss because the quantity traded in the market does not decrease significantly. Additionally, because consumers are less responsive to price changes, they end up bearing a greater portion of the tax burden. Finally, because the quantity traded does not decrease significantly, the government is able to collect more tax revenue.

Other Things Being Equal, the Less Elastic Demand Is