Deadweight Loss Is Minimized When a Tax Is Levied on Something

question 76

Multiple Choice

Deadweight loss is minimized when a tax is levied on something for which people:

• A) are not likely to change their behavior much in response to a price change.
• B) are very likely to change their behavior in response to a price change.
• C) have a large income elasticity of demand.
• D) have a small income elasticity of demand.

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Definitions:

Accounts Payable

Liabilities representing amounts the company owes to suppliers or creditors for goods and services received but not yet paid for.

Vouchers

Documents representing an internal intent to make a payment to an external party, often used in accounts payable processes.

Written Authorizations

Official documents or agreements that grant permission or rights, often used to approve financial transactions or operations.

Gross Method

An accounting practice where purchases are recorded at their full invoice amount without taking deductions for discounts.