Suppose the Supply Curve Becomes More Inelastic, but Nothing Else

question 71

True/False

Suppose the supply curve becomes more inelastic, but nothing else changes.This implies that the deadweight loss of a tax will be smaller.

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Definitions:

Average Inventory

The mean stock level held by a business over a certain period of time, calculated to manage and evaluate inventory efficiently.

Aggregate Supply Curve

A graph showing the relationship between the total output produced by an economy and the price level for output, over a period.

Actual Price Level

The current index of prices for goods and services, reflecting inflation or deflation in an economy.

Short-run

A period in which at least one input is fixed while others can be varied to change the level of output.