If elasticity of demand is 0.7, elasticity of supply is 0.7, and a 5 percent excise tax is levied on the good:
A) the tax burden on suppliers will be greater.
B) the tax burden on consumers will be greater.
C) the tax burden will be the same for both.
D) one cannot say who will bear the greater burden without knowing the tax.

Question

Quizplus · Accepted Answer

When the elasticity of demand and supply are equal, the tax burden is shared equally between consumers and suppliers.

If Elasticity of Demand Is 0