Large effect on the equilibrium quantity

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Suppose that policymakers are considering placing a tax on either of two markets. In Market A, the tax will have a significant effect on the price consumers pay, but it will not affect equilibrium quantity very much. In Market B, the same tax will have only a small effect on the price consumers pay, but it will have a large effect on the equilibrium quantity. Other factors are held constant. In which market will the tax have a smaller deadweight loss?

a. The deadweight loss will be the same in both markets.

b. Market B

c. Market A

d. There is not enough information to answer the question.

Reference no: EM131257466

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