The incidence of a sales tax falls more heavily on consumers when

Name: The incidence of a sales tax falls more heavily on consumers when
Brand: Quizplus
Rating: 5.0 (44 reviews)

Question

Quizplus · Accepted Answer

When the quantity demanded is insensitive to price changes (i.e. the demand is inelastic), consumers are less likely to reduce their consumption of the taxed good in response to an increase in price due to the tax. This means that they will end up paying a larger portion of the tax, and the incidence of the tax will fall more heavily on them.

The Incidence of a Sales Tax Falls More Heavily on Consumers