Answer:
Elasticity of demand impacts the dead weight loss caused by the tax.
More elastic the demand for a good, higher will be the dead weight loss caused by the tax.
The elasticity of demand for apples is 0.9
The elasticity of demand for bananas is 1.6
The elasticity of demand for peaches is 0.8
Greater the value of elasticity of demand, more elastic is the demand.
Bananas have the most elastic demand, followed by apples and then peaches.
So,
Bananas will have the highest dead weight loss followed by apples and then peaches.
Thus,
The correct order is bananas, apples, peaches.
Hence, the correct answer is the option (c).
Explanation:
