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:

Adjustment

The process of adapting or becoming accustomed to new conditions or environments.

Fulfilment

A feeling of happiness and satisfaction, especially from achieving one's goals or realizing one’s potential.

Corticosteroids

A class of steroid hormones that are produced in the adrenal gland and regulate a wide range of processes including immune response and metabolism.