Suppose price elasticity of demand is relatively inelastic for good X.If the price elasticity of supply for good X is elastic and an excise tax is imposed on good X,who will bear the greater burden of the tax?

Question

Quizplus · Accepted Answer

When demand is relatively inelastic and supply is elastic, consumers tend to bear a greater burden of the tax because their demand does not decrease significantly with a price increase, whereas producers can more easily adjust their quantity supplied.

Suppose Price Elasticity of Demand Is Relatively Inelastic for Good