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How do elasticities of supply and demand affect DWL?

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Answer:

Because the elasticities of supply and demand measure how much market participants respond to market conditions, larger elasticities imply larger DW losses.

Step-by-step explanation:

As a tax grows larger, it distorts incentives more, and its DW loss grows larger. Because a tax reduces the size of the market, however, tax revenue does not continually increase. It first rises with the size of a tax, but if the tax gets large enough, tax revenue starts to fall.

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