If Demand Is Elastic, the Tax Incidence Falls More Heavily

question 382

Multiple Choice

If demand is elastic, the tax incidence falls more heavily on the _____, and deadweight loss is relatively _____.

• A) buyer; large
• B) buyer; small
• C) seller; large
• D) seller; small

---

Definitions:

Tax Revenue

The income that is gained by governments through taxation.

Government Spending

Expenditures by the government sector on goods and services, including infrastructure, education, defense, and healthcare, impacting an economy's aggregate demand.

Budget Deficit

A situation where a government's expenditures exceed its revenues within a specific fiscal period, leading to borrowing or debt accumulation.

Loanable Funds

The funds accessible for lending within the financial market.