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

Question

Quizplus · Accepted Answer

When demand is more elastic, buyers are more sensitive to price changes and may decide to reduce their demand significantly. As a result, the burden of the tax will shift more to producers as they will be forced to lower their prices in order to keep their products competitive, and their profits will be reduced accordingly. Therefore, consumers will bear a smaller portion of the tax burden.

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