The Demand for Bread Is Less Elastic Than the Demand

question 193

True/False

The demand for bread is less elastic than the demand for donuts; hence, a tax on bread will create a larger deadweight loss than will the same tax on donuts, other things equal.

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Definitions:

Market Share Theory

Product liability theory which holds that when it is impossible to identify the manufacturer of a particular product that caused harm, the plaintiff may sue all manufacturers of the product, with liability apportioned among them on the basis of each one’s market share.

Products Liability Action

A legal claim against a manufacturer or seller for producing or selling a defective product causing injury or damage.

MacPherson Case

A landmark legal case that established the principle of duty of care in negligence, making manufacturers liable for harm caused by defective products.

Foreseeable Plaintiff

A person who is reasonably expected to be affected by a defendant's actions, thus entitled to protection under the duty of care in negligence law.