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

Question

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

Quizplus · Accepted Answer

When demand is more elastic, consumers are more responsive to price changes, including those resulting from taxes. This leads to a larger decrease in quantity demanded for a given tax increase, resulting in a greater deadweight loss as the market moves further from the efficient equilibrium quantity.

Other Things Being Equal, the More Elastic Demand Is