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:

Fluid

A substance that has no fixed shape and yields easily to external pressure; can be a gas or a liquid.

Pleura

The thin membrane that envelops the lungs and lines the inner surface of the chest wall, performing a crucial role in respiratory movement and protection.

Acute Epiglottitis

A serious, life-threatening condition characterized by inflammation of the epiglottis, the flap at the base of the tongue that keeps food from going into the trachea during swallowing.

Obstruction

A blockage in a bodily passage preventing the normal flow of fluids or contents within the body.