If a tax is imposed on a market with inelastic demand and elastic supply,

Question

Quizplus · Accepted Answer

In a market with inelastic demand and elastic supply, the buyers have a relatively lower responsiveness to changes in price compared to the sellers. Therefore, with the imposition of a tax, the market equilibrium price will increase, and buyers will continue to purchase the good at a higher price, as their demand is inelastic. Hence, it is more likely that buyers will bear most of the burden of the tax.

If a Tax Is Imposed on a Market with Inelastic