Figure 8-14
-Refer to Figure 8-14.Which of the following combinations will maximize the deadweight loss from a tax?
A)supply 1 and demand 1
B)supply 2 and demand 2
C)supply 1 and demand 2
D)supply 2 and demand 1

Question

Figure 8-14 
-Refer to Figure 8-14.Which of the following combinations will maximize the deadweight loss from a tax?
A)supply 1 and demand 1 
B)supply 2 and demand 2 
C)supply 1 and demand 2 
D)supply 2 and demand 1

Quizplus · Accepted Answer

Deadweight loss from a tax is maximized when both supply and demand are more elastic. Supply 2 and demand 2 likely represent more elastic curves, leading to a larger deadweight loss.

Figure 8-14 -Refer to Figure 8-14.Which of the Following Combinations Will Maximize