Sellers of a good will bear the larger part of the tax burden, and buyers will bear a smaller part of the tax burden, when the
A)tax is placed on the sellers of the good.
B)tax is placed on the buyers of the good.
C)supply of the good is more elastic than the demand for the product.
D)demand for the good is more elastic than the supply of the product.

Question

Sellers of a good will bear the larger part of the tax burden, and buyers will bear a smaller part of the tax burden, when the
A)​tax is placed on the sellers of the good.
B)​tax is placed on the buyers of the good.
C)​supply of the good is more elastic than the demand for the product.
D)​demand for the good is more elastic than the supply of the product.

Quizplus · Accepted Answer

The tax burden falls more on the side of the market that is less elastic because that side has a harder time avoiding the tax by changing the quantity bought or sold. When demand is more elastic than supply, consumers are more responsive to price changes and can more easily find alternatives, thus sellers bear a larger part of the tax burden.

Sellers of a Good Will Bear the Larger Part of the Tax