Suppose an Excise Tax Is Imposed on Two Products X

Multiple Choice

Suppose an excise tax is imposed on two products X and Y, both of which have identical supply elasticities. The demand for good X is highly elastic, while the demand for good Y is highly inelastic. The deadweight loss (or excess burden) will be

A) equal in both cases.
B) larger for good X than good Y.
C) larger for good Y than good X.
D) zero in both cases.