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For a Given Supply Curve, How Does the Elasticity of Demand

Question 122

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For a given supply curve, how does the elasticity of demand affect the excess burden of a tax imposed on a product?


A) The excess burden of the tax will be minimized when the demand is unit elastic.
B) The excess burden of the tax will be greater when the elasticity of supply is greater than the elasticity of demand.
C) The excess burden of the tax will be greater when the demand is less elastic than when it is more elastic.
D) The excess burden of the tax will be greater when the demand is more elastic than when it is less elastic.

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