Figure 8-17
-Refer to Figure 8-17. Suppose the government imposes a $1 tax in each of the four markets represented by demand curves D1, D2, D3, and D4. The deadweight will be the smallest in the market represented by
A)D1.
B)D2.
C)D3.
D)D4.

Question

Figure 8-17 
-Refer to Figure 8-17. Suppose the government imposes a $1 tax in each of the four markets represented by demand curves D1, D2, D3, and D4. The deadweight will be the smallest in the market represented by
A)D1. 
B)D2. 
C)D3. 
D)D4.

Quizplus · Accepted Answer

The deadweight loss from a tax is smaller in markets with more inelastic demand. D1 represents the most inelastic demand curve, leading to the smallest deadweight loss.

Figure 8-17 -Refer to Figure 8-17. Suppose the Government Imposes a $1