Which of the Following Situations Will Result in the Greatest

question 66

Multiple Choice

Which of the following situations will result in the greatest deadweight loss due to a per-unit tax on a good?

• A)Supply and demand are both relatively price-inelastic.
• B)Supply is relatively price-inelastic and demand is relatively price-elastic.
• C)Supply and demand are both relatively price-elastic.
• D)Supply is relatively price-elastic and demand is relatively price-inelastic.
• E)Both supply and demand do not exist.

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Definitions:

Gross Profits

The financial gain obtained after subtracting the cost of goods sold from total revenue, indicating the efficiency of a company’s production process.

Probability

The measure of the likelihood that an event will occur, expressed as a number between 0 and 1, where 0 indicates impossibility and 1 indicates certainty.

Expected Opportunity Loss

A statistical determination of potential loss due to not selecting the optimal choice among different options.

Gross Profits

The difference between revenue and the cost of goods sold before deducting overheads, payroll, taxation, and interest payments.