Figure 8-14 -Refer to Figure 8-14.Panel (A)and Panel (B)each Illustrate a $2

Multiple Choice

Figure 8-14


-Refer to Figure 8-14.Panel (a) and Panel (b) each illustrate a $2 tax placed on a market.In comparison to Panel (b) ,Panel (a) illustrates which of the following statements?

A) When demand is relatively inelastic, the deadweight loss of a tax is smaller than when demand is relatively elastic.
B) When demand is relatively elastic, the deadweight loss of a tax is larger than when demand is relatively inelastic.
C) When supply is relatively inelastic, the deadweight loss of a tax is smaller than when supply is relatively elastic.
D) When supply is relatively elastic, the deadweight loss of a tax is larger than when supply is relatively inelastic.