Asked by manuel castro on Jun 26, 2024
Verified
The more inelastic are demand and supply, the greater is the deadweight loss of a tax.
Deadweight Loss
An economic inefficiency arising when there's a failure to attain or an impossibility of attaining equilibrium for a particular good or service.
- Acquire knowledge on how the elasticity of demand and supply affects the deadweight loss due to taxation.
Verified Answer
CT
Caitlyn TobinJul 02, 2024
Final Answer :
False
Explanation :
The more elastic are demand and supply, the greater is the deadweight loss of a tax, because consumers and producers are more responsive to price changes, leading to larger reductions in quantity traded.
Learning Objectives
- Acquire knowledge on how the elasticity of demand and supply affects the deadweight loss due to taxation.