Calculate the deadweight loss associated with per unit tax

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Prove the following claim: The more elastic the demand and supply curves are, the higher the deadweight loss associated with the introduction of a per unit tax will be. Hint: consider two general linear demand and supply functions, calculate the deadweight loss associated with a per unit tax t (it will be a function of t and demand and supply parameters), and see how this deadweight loss depends on your demand and supply parameters and how can these parameters relate to the elasticities of demand and supply.

Reference no: EM131109621

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