The burden of a per unit tax on a product will fall primarily on producers when:
A) the tax is collected from customers.
B) demand is highly elastic with respect to price.
C) demand is highly inelastic with respect to price.
D) the tax is collected from producers.

Question

Quizplus · Accepted Answer

When demand is highly elastic, consumers are very responsive to price changes, so producers cannot pass much of the tax onto consumers without losing sales, resulting in producers bearing more of the tax burden.

The Burden of a Per Unit Tax on a Product