Suppose that a tax is placed on books.If the sellers pay the majority of the tax,then we know that the

Question

Quizplus · Accepted Answer

When the majority of the tax burden falls on sellers, it indicates that the supply of books is more inelastic than the demand for books. This means that sellers are limited in their ability to adjust prices in response to the tax and will end up paying a significant portion of the tax themselves. In contrast, if demand were more inelastic than supply, buyers would bear the majority of the tax burden since they are less able to adjust their purchasing behavior in response to price changes. Therefore, the best choice is B. Choices A, C, and D are incorrect as they do not reflect the relationship between tax incidence and elasticity of supply and demand.

Suppose That a Tax Is Placed on Books