Which of the following is true?
i.If demand is perfectly elastic,the tax creates no deadweight loss.
ii.The more elastic the supply of a factor of production,the greater is the deadweight loss from an income tax.
iii.A tax is regressive if the average tax rate rises with income.
A) only i
B) only ii
C) only iii
D) ii and iii
E) i and ii

Question

Quizplus · Accepted Answer

If the supply of a factor of production is more elastic, the deadweight loss from an income tax is greater because the quantity supplied is more responsive to changes in price, leading to larger distortions in the market.

Which of the Following Is True