All else constant a tax in a market where either supply or d

All else constant, a tax in a market where either supply or demand is less elastic will cause less deadweight loss than in a market where demand and/ and supply is more elastic (less inelastic). True False

Solution

Deadweight loss is caused when there is loss in consumer surplus that is more than the gain in producer surplus. The steeper (less elastic) the demand or supply curve, the higher the loss in consumper surplus relative to gain in producer surplus. So, deadweight loss is more when demand or supply curve is less elastic.

Given statement is false.