Taxing goods with very elastic supply generates more deadweight loss than taxing goods with very inelastic supply because
A) the amount of the tax is larger.
B) the change in producer behavior is greater.
C) producers have to pay these taxes out of pocket.
D) the change in producer behavior is smaller.
E) the government does not bother collecting the revenue.
Correct Answer:
Verified
Q155: The luxury tax of 1990 produced far
Q156: Explain the concept of a producer's willingness
Q157: In a small town,the market price for
Q158: Draw a set of supply and demand
Q159: Draw a set of supply and demand
Q161: Supply and demand both tend to become
Q162: Taxes cause consumers to lose consumer surplus
Q163: Why is deadweight loss greater when goods
Q164: Explain why goods that are necessities are
Q165: Why will a government-imposed quantity restriction in
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents