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:

SQ3R Method

A study strategy that involves five steps: Survey, Question, Read, Recite, and Review to enhance comprehension and retention of material.

Retention

The ability to maintain possession of information or skills over time, often assessed in educational and psychological contexts.

Psychology Class

An academic course focusing on the study of mind, brain, and behavior to understand human and animal mental functions, emotions, and social interactions.

SQ3R

A reading comprehension method named for its five steps: Survey, Question, Read, Recite, and Review, designed to improve understanding and retention of written information.