Figure 8-16
-Refer to Figure 8-16. Panel (a) and Panel (b) each illustrate a $2 tax placed on a market. In comparison to Panel (a), Panel (b) illustrates which of the following statements?
A)When demand is relatively inelastic, the deadweight loss of a tax is smaller than when demand is relatively elastic.
B)When demand is relatively elastic, the deadweight loss of a tax is larger than when demand is relatively inelastic.
C)When supply is relatively inelastic, the deadweight loss of a tax is smaller than when supply is relatively elastic.
D)When supply is relatively elastic, the deadweight loss of a tax is larger than when supply is relatively inelastic.

Question

Figure 8-16  
-Refer to Figure 8-16. Panel (a) and Panel (b) each illustrate a $2 tax placed on a market. In comparison to Panel (a), Panel (b) illustrates which of the following statements?
A)When demand is relatively inelastic, the deadweight loss of a tax is smaller than when demand is relatively elastic. 
B)When demand is relatively elastic, the deadweight loss of a tax is larger than when demand is relatively inelastic. 
C)When supply is relatively inelastic, the deadweight loss of a tax is smaller than when supply is relatively elastic. 
D)When supply is relatively elastic, the deadweight loss of a tax is larger than when supply is relatively inelastic.

Quizplus · Accepted Answer

The Answer of Figure 8-16  
-Refer to Figure 8-16. Panel (a) and Panel (b) each illustrate a $2 tax placed on a market. In comparison to Panel (a), Panel (b) illustrates which of the following statements?
A)When demand is relatively inelastic, the deadweight loss of a tax is smaller than when demand is relatively elastic. 
B)When demand is relatively elastic, the deadweight loss of a tax is larger than when demand is relatively inelastic. 
C)When supply is relatively inelastic, the deadweight loss of a tax is smaller than when supply is relatively elastic. 
D)When supply is relatively elastic, the deadweight loss of a tax is larger than when supply is relatively inelastic.