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

Question

Quizplus · Accepted Answer

The deadweight loss from a tax is smaller when demand and supply are less elastic because the quantity traded changes less. Additionally, a smaller tax results in a smaller deadweight loss.

Consider a Good to Which a Per-Unit Tax Applies