Question

rice P4 Supply H D F G Demand Quantity 02 29. Refer to Figure 7-23 The figure depicts a market equilibrium where there is a tax on the good transacted. The deadweight loss as a result of the tax is represented by the area of a. A+B+D+F. b. C+H. c. B+D d. G+I Figure 8-16 Price Panel (b) Price Pasel (a) Sepply Dand Dand 1 2 34 5 67 Deantity 4 567 Denti- 1 2 30. Refer to Figure 8-16. Panel (a) and Panel (b) each illustrate a $2 tax placed on a market. In comparison to Panel (b), Panel (a) illustrates which of the following statements? a. When demand is relatively inelastic, the deadweight loss of a tax is smaller than when demand is relatively elastic. b. When demand is relatively elastic, the deadweight loss of a tax is larger than when demand is relatively inelastic. c. When supply is relatively inelastic, the deadweight loss ofa tax is smaller than when supply is relatively elastic. d. When supply is relatively elastic, the deadweight loss of a tax is smaller than when supply is relatively inelastic. 31. What is the fundamental basis for trade among nations?

Answer 1

29) The deadweight loss is the area C+H

Option(B)

30) When supply is relatively elastic, the deadweight loss is smaller than when it is inelastic

option(D)