If the supply of automobiles becomes more inelastic,then a tax on automobiles is
A) paid more by the buyers after the change than before.
B) paid more by the sellers after the change than before.
C) always split evenly between the buyers and the sellers.
D) paid more by the government after the change than before.
E) always paid entirely by the buyers.

Question

Quizplus · Accepted Answer

When the supply of automobiles becomes more inelastic, it means that sellers are less able to adjust their quantity supplied in response to price changes. As a result, when a tax is imposed, sellers are less able to pass the tax onto buyers in the form of higher prices, leading to sellers bearing a larger burden of the tax after the change.

If the Supply of Automobiles Becomes More Inelastic,then a Tax