Figure 8-15

question 39

Multiple Choice

Figure 8-15
-Refer to Figure 8-15.Panel (a) and Panel (b) each illustrate a $4 tax placed on a market.In comparison to Panel (a) ,Panel (b) illustrates which of the following statements?

• A)When demand is relatively inelastic,the deadweight loss of a tax is smaller than when demand is relatively elastic.
• B)When demand is relatively elastic,the deadweight loss of a tax is larger than when demand is relatively inelastic.
• C)When supply is relatively inelastic,the deadweight loss of a tax is smaller than when supply is relatively elastic.
• D)When supply is relatively elastic,the deadweight loss of a tax is larger than when supply is relatively inelastic.

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Definitions:

Public

Relating to or involving the people as a whole; often used to describe companies whose shares are available to be bought and sold by the general population.

Agency Costs

Expenses stemming from conflicts of interest between parties in a corporation, especially between owners and managers.

Stockholders

Individuals or entities that own shares of a company's stock, making them owners of a portion of the company.

Management

The process of dealing with or controlling things or people, often in the context of running a business, organization, or project.