If the government wants to raise tax revenue and shift most of the tax burden to the consumers, it would impose a tax on a good with a
A) flat (elastic) demand curve and a steep (inelastic) supply curve.
B) steep (inelastic) demand curve and a flat (elastic) supply curve.
C) steep (inelastic) demand curve and steep (inelastic) demand curve.
D) flat (elastic) demand curve and a flat (elastic) supply curve.

Question

Quizplus · Accepted Answer

When demand is inelastic, consumers are less sensitive to price changes, so they bear more of the tax burden. An elastic supply means producers can adjust easily, shifting the burden to consumers.

If the Government Wants to Raise Tax Revenue and Shift