A Tax Collected from Buyers Generates a Smaller Deadweight Loss

question 44

True/False

A tax collected from buyers generates a smaller deadweight loss than a tax collected from sellers.

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Definitions:

Income Elasticity

A measure of how much the demand for a good will change in response to a change in consumers' income.

Inferior Good

An inferior good is a type of good whose demand decreases when consumer income rises, in contrast to normal goods, whose demand increases with rising incomes.

Shoes

Footwear items designed to protect and comfort the human foot while offering various styles and functions.

Income Elasticity

Measures how the quantity demanded of a good changes in response to a change in consumers' income.