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.

---

Definitions:

Federal Government Expenditures

The total amount of money spent by the federal government of a country, covering all its operations, programs, and services.

National Defense

Activities and measures undertaken by a government to protect its country from external threats or military aggression.

Expenditure Item

A specific category of spending, either by an individual, organization, or government.

Corporate Income Taxes

Taxes levied on the net income (profit) of corporations by the government.