An excise tax levied on a product will impose a smaller relative burden on consumers (and a larger relative burden on sellers) when the:
A) supply of the product is relatively less elastic than demand.
B) supply of the product is relatively more elastic than demand.
C) tax is collected from the buyers.
D) tax is collected from the sellers.

Question

Quizplus · Accepted Answer

When the supply of the product is relatively less elastic than demand, it means that producers have a greater ability to pass on the tax to consumers in the form of higher prices. As a result, consumers will bear a smaller relative burden of the tax, while sellers will bear a larger relative burden.

An Excise Tax Levied on a Product Will Impose a Smaller