I have a picture of the question added as well as a photo from my Econ book. The photo in my book shows how the supply curve, when vertical, the deadweight loss from a tax is small. this is why I chose option a. Because wouldn’t that mean it would raise a small amount of tax revenue? Or would that mean that tax revenue would be larger-because deadweight loss is smaller? Tatively inelast(a) and (b), the demand curve and the size of the tax are the sameticity of supply is different. Notice that the more elastic the supplye deadweight loss of the tax. In panels (c) and (d), the supply curveof the tax are the same, but the price elasticity of demand is differernat the more elastic the demand curve, the larger the deadweight lo(a) Inelastic SupplyPricePriceSupplyWhen supply isrelatively inelastic,the deadweight lossof a tax is small.SizeoftaxSize of taxDemandQuantity(c) Inelastic DemandPricePriceSupply............................... f the labor supply curve is nearly vertical, a tax on laborwill raise small amounts of tax revenueO has a large deadweight lossBoth b and c are correct.O has little impact on the amount of work workers are willing to do

The concept of elasticity plays a very important role while the government is trying to collect tax…

Answered: that mean it would raise a small amount…

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter8: Application: The Cost Of Taxation

Section: Chapter Questions

Problem 4PA

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I have a picture of the question added as well as a photo from my Econ book. The photo in my book shows how the supply curve, when vertical, the deadweight loss from a tax is small. this is why I chose option a. Because wouldn’t that mean it would raise a small amount of tax revenue? Or would that mean that tax revenue would be larger-because deadweight loss is smaller?

Tatively inelast
(a) and (b), the demand curve and the size of the tax are the same
ticity of supply is different. Notice that the more elastic the supply
e deadweight loss of the tax. In panels (c) and (d), the supply curve
of the tax are the same, but the price elasticity of demand is differer
nat the more elastic the demand curve, the larger the deadweight lo
(a) Inelastic Supply
Price
Price
Supply
When supply is
relatively inelastic,
the deadweight loss
of a tax is small.
Size
of
tax
Size of tax
Demand
Quantity
(c) Inelastic Demand
Price
Price
Supply
.........
......................

f the labor supply curve is nearly vertical, a tax on labor
will raise small amounts of tax revenue
O has a large deadweight loss
Both b and c are correct.
O has little impact on the amount of work workers are willing to do

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