Consider a 10% Excise Tax That Is Similarly Applied to Good

Multiple Choice

Consider a 10% excise tax that is similarly applied to good X,which has a price elasticity of 2.7,and to good Y,that has a price elasticity of 0.6.We can predict that the excess burden of this tax in the market for good X will be ________ the excess burden in the market for good Y.

A) no larger than
B) equal to
C) smaller than
D) larger than
E) 2.1 times the size of