How does the elasticity of demand influence the incidence of a tax, the tax revenue, and the deadweight loss?
What will be an ideal response?
The more elastic the demand for a given supply, the smaller the increase in the price paid by the buyers and the greater the decrease in the price received by the sellers, which means that the incidence on buyers is smaller. Additionally, the more elastic the demand, the smaller the quantity bought so the smaller the tax revenue; and the larger the deadweight loss.
Economics
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When the nominal rate of interest and the rate of inflation are the same, the real interest rate is zero
Indicate whether the statement is true or false
Economics
If the government wants to regulate a natural monopoly, it will force the firm to set price equal to
A) average cost. B) marginal cost. C) marginal revenue. D) None of the above.
Economics