Question

Considering an upward-sloping supply curve for each of the listed goods, which one would result in the smallest deadweight loss if taxed?

A) Kitchen appliances
B) Medicine
C) Restaurant meals
D) Big screen TVs

Answer 1

The supply curve for medicine is likely to result in the smallest deadweight loss if taxed.

Step-by-step explanation:

The smallest deadweight loss from taxation will occur for goods that have a relatively inelastic supply curve. In this case, the supply curve for medicine is likely to be the most inelastic, resulting in the smallest deadweight loss if taxed.