Consider a good to which a per-unit tax applies.The size of the deadweight that results from the tax is smaller,the
A)larger is the price elasticity of demand.
B)smaller is the price elasticity of supply.
C)larger is the amount of the tax.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

A smaller price elasticity of supply means that the quantity supplied is less responsive to price changes, resulting in a smaller deadweight loss when a tax is imposed.

Consider a Good to Which a Per-Unit Tax Applies