Last Updated 30 Jun 2021

The price elasticities of supply and demand affect?

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  • both the size of the deadweight loss from a tax and the tax incidence.
  • the size of the deadweight loss from a tax but not the tax incidence.
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  • the tax incidence but not the size of the deadweight loss from a tax.
  • neither the size of the deadweight loss from a tax nor the tax incidence

Answer: Affects both the size of the deadweight loss from a tax and the tax incidence.

If demand is more elastic then tax incidence (burden) of tax will be more on consumers and if supply is more elastic then producers will bear the brunt of the tax
Also more the elasticity of demand and supply, more is the deadweight loss from a tax

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The price elasticities of supply and demand affect?. (2018, Sep 13). Retrieved from https://phdessay.com/the-price-elasticities-of-supply-and-demand-affect/

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