Figure 18-2 Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 18-2. If the government imposes an excise tax of $1.00 on every unit sold, the producer's burden of the tax A) is greater under the more elastic supply curve S₀. B) is greater under the less elastic supply curve S₀. C) is greater under the less elastic supply curve S₁. D) is the same under either supply curve because there is a single demand curve that captures buyers' market behavior.

Question

Quizplus · Accepted Answer

The producer's burden of the tax is greater under the less elastic supply curve S₁ because producers are less able to pass the tax onto consumers when supply is inelastic, resulting in a larger share of the tax burden falling on them.

Figure 18-2 Figure 18-2 Shows a Demand Curve and Two