Question

1. suppose the supply of and demand for food are highly inelastic. based on this information, if the government decides to impose a tax on food we can expect the deadweight loss to be relatively select 2. unprepared food is exempt from the sales tax, which can be explained by noting that taxing food would select large small

Explanation:

1. Deadweight loss from a tax is related to the elasticity of supply and demand. When supply and demand are highly in - elastic, changes in quantity due to the tax are small. Since deadweight loss is a function of the change in quantity, it will be small.
2. Unprepared food being exempt from sales tax can be related to the in - elasticity of demand for food. Taxing food would disproportionately affect consumers (especially low - income ones) because food is a necessity with in - elastic demand.

Answer:

1. small
2. disproportionately affect consumers (due to in - elastic demand for food as a necessity)