Deadweight Losses Arising from the Presence of an Excise Tax

question 103

Essay

Deadweight losses arising from the presence of an excise tax are greatest when demand:
A.and supply are relatively inelastic.
B.is relatively inelastic and supply is relatively elastic
C.is relatively elastic and supply is relatively inelastic.
D.and supply are relatively elastic.

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Definitions:

Proximal Portion

The part of a body or structure that is closest to the center or to the point of attachment.

Carbohydrates

Organic compounds, such as sugars, starches, and cellulose, that are an important source of energy for living organisms.

Amylase

is an enzyme that helps in the digestion of carbohydrates by breaking them down into sugars, found in saliva and pancreatic fluid.

Saliva

A clear liquid secreted by the salivary glands in the mouth, which helps in digestion and maintains oral hygiene.