Order the answer to: Suppose the supply and demand curves for a good are

Academic Writing business-economics Order the answer to: Suppose the supply and demand curves for a good are

business-economics

Order the answer to: Suppose the supply and demand curves for a good are

Question Suppose the supply and demand curves for a good are linear.
a. Present and discuss a diagram to show that the deadweight loss from a tax is equal to one-half the product of (1) the tax per unit of the good, and (2) the change in the equilibrium quantity of the good as result of the tax.
b. Use your answer to part (a) to answer the following question. If your goal is to minimize the deadweight loss from a tax, would you tax goods for which demand is elastic or goods for which demand is inelastic, everything else equal?
Subject business-economics
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