Question

Suppose a tax of $1 per unit is imposed on a good. The more elastic the supply of the good, other things equal:

a. the smaller is the response of quantity supplied to the tax.
b. the larger is the tax burden on sellers relative to the tax burden on buyers.
c. the larger is the deadweight loss of the tax.
d. All of the above are correct

Answer 1

c. the larger is the deadweight loss of the tax.

Step-by-step explanation:

Supply is elastic if a small change in price has a greater effect on quantity supplied.

If a tax is imposed, and supply in elastic, the quantity supplied would fall.

Deadweight loss is when quantity supplied reduces as a result of tax.

If supply is elastic, the larger is the deadweight loss of the tax.

I hope my answer helps you