A new tax is imposed in a market with inelastic supply and inelastic demand.  What do we know about the magnitude of the deadweight loss that will be generated by the new tax?   a The deadweight loss will be large. b The deadweight loss will be small.  c The deadweight loss will be small relative to the tax revenue generated.   d The deadweight loss will be large relative to the tax revenue generated.

Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter5: Elasticity Of Demand And Supply
Section5.A: Appendix: Price Elasticity And Tax Incidence
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A new tax is imposed in a market with inelastic supply and inelastic demand.  What do we know about the magnitude of the deadweight loss that will be generated by the new tax?
 
a
The deadweight loss will be large.
b
The deadweight loss will be small. 
c
The deadweight loss will be small relative to the tax revenue generated.  
d
The deadweight loss will be large relative to the tax revenue generated.
 
 
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