When demand is relatively elastic, the deadweight loss of a tax is larger than when demand is relatively inelastic.

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Quizplus · Accepted Answer

When demand is relatively elastic, consumers are more sensitive to price changes, including those caused by taxes, leading to a larger reduction in quantity bought and sold, which in turn results in a larger deadweight loss compared to a situation where demand is relatively inelastic.

When Demand Is Relatively Elastic, the Deadweight Loss of a Tax