asked 225k views
2 votes
The size of the deadweight loss generated from a tax is affected by the

asked
User Annalise
by
7.6k points

1 Answer

4 votes

Answer:

The answer is: Price elasticities of both supply and demand

Step-by-step explanation:

When the government imposes a new tax on a certain product or service, their consumers will naturally tend to buy less and their suppliers will tend to offer less.

For exmaple, if a product's demand is very price elastic, a small increase in its price will result in larger decrease in units sold.

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User Ted Van Gaalen
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8.0k points
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