Determinants of Deadweight Loss What determines whether the deadweight loss from a tax is small or large? The magnitude of the deadweight loss depends on how much the quantity supplied and quantity demanded respond to changes in the price That, in turn depends on the price elasticities of supply and demandDeterminants of Deadweight Loss • What determines whether the deadweight loss from a tax is small or large? • The magnitude of the deadweight loss depends on how much the quantity supplied and quantity demanded respond to changes in the price. • That, in turn, depends on the price elasticities of supply and demand