Suppose that a market is initially in equilibrium,then a per-unit tax is imposed on sellers.The more inelastic demand is,the ______ the burden of the tax borne by ______.
A) smaller;consumers
B) larger;consumers
C) larger;producers
D) larger;consumers and producers
E) smaller;consumers and producers

Question

Quizplus · Accepted Answer

When demand is more inelastic, the burden of the tax is shifted more towards consumers rather than producers because consumers are less sensitive to changes in price and will still buy the product even with the tax. Therefore, the burden of the tax is larger for consumers when demand is more inelastic.

Suppose That a Market Is Initially in Equilibrium,then a Per-Unit