Suppose an Excise Tax Is Imposed on Two Products X

question 61

Multiple Choice

Suppose an excise tax is imposed on two products X and Y, both of which have identical supply elasticities. The demand for good X is highly elastic, while the demand for good Y is highly inelastic. The deadweight loss (or excess burden) will be

• A) equal in both cases.
• B) larger for good X than good Y.
• C) larger for good Y than good X.
• D) zero in both cases.

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Definitions:

Surveys

Research methods that involve collecting data from a sample of individuals through their responses to questions, often used in social sciences.

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Enduring characteristics and behaviors that differentiate one individual from another.

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The various feelings that an individual can experience, which can affect their thoughts, behaviors, and physiological conditions.

John Watson

An American psychologist regarded as one of the founders of behaviorism, emphasizing the importance of observable behaviors over internal phenomena like thoughts and feelings.