Use the following to answer question:
-(Table: The Market for Fried Twinkies)Use Table: The Market for Fried Twinkies.Of the $0.30 tax per fried Twinkie,consumers actually pay _____,while producers actually pay _____.

Question

Use the following to answer question: 
-(Table: The Market for Fried Twinkies)Use Table: The Market for Fried Twinkies.Of the $0.30 tax per fried Twinkie,consumers actually pay _____,while producers actually pay _____.

Quizplus · Accepted Answer

The incidence of the tax is determined by the price elasticity of demand and supply. In this case, the demand is relatively inelastic (quantity demanded is not very responsive to price changes) and the supply is relatively elastic (quantity supplied is very responsive to price changes). As a result, consumers bear most of the burden of the tax, paying $0.20 per fried Twinkie, while producers only pay $0.10 per fried Twinkie.

Use the Following to Answer Question