Suppose demand for good X is less elastic than demand for good Y. Suppose the government wants to minimize the deadweight loss from taxation. Which good should the government tax in this case:     A. Good X   B. Good Y   C. It doesn’t matter which good the government taxes, deadweight loss will be the same in both cases

Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter8: Application: The Cost Of Taxation
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Suppose demand for good X is less elastic than demand for good Y. Suppose the government wants to minimize the deadweight loss from taxation. Which good should the government tax in this case:

 

  A.

Good X

  B.

Good Y

  C.

It doesn’t matter which good the government taxes, deadweight loss will be the same in both cases

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