Suppose a tax of $1 per unit is imposed on a good.The more elastic the supply of the good,other things equal,the
A)smaller is the response of quantity supplied to the tax.
B)larger is the tax burden on sellers relative to the tax burden on buyers.
C)larger is the deadweight loss of the tax.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

When supply is more elastic, the quantity supplied is more responsive to price changes, leading to a larger deadweight loss as the tax distorts the market equilibrium more significantly.

Suppose a Tax of $1 Per Unit Is Imposed on a Good.The