Given an upward sloping supply curve,the more inelastic is demand,the greater the fraction of the burden of taxation that is borne by the consumer.

Question

Quizplus · Accepted Answer

When the demand is inelastic, consumers are less responsive to changes in price. Thus, if the tax is imposed on the supplier, they might pass on a significant portion of the tax burden to the consumers without losing many sales. On the other hand, if the tax is imposed on the consumer, they cannot easily reduce their consumption, and thus, they end up bearing a greater fraction of the tax burden.

Given an Upward Sloping Supply Curve,the More Inelastic Is Demand,the