The amount of a tax paid by the sellers will be larger the more _______ the demand and the more _______ The supply.

Question

The amount of a tax paid by the sellers will be larger the more _______  the demand and the more _______ The supply.

Quizplus · Accepted Answer

The amount of a tax paid by the sellers will be larger the more inelastic the demand and the more elastic the supply. This is because when demand is inelastic, consumers are less responsive to price changes, so they will bear a larger share of the tax burden. When supply is elastic, producers are more responsive to price changes, so they will bear a smaller share of the tax burden.

The Amount of a Tax Paid by the Sellers Will