As part of an anti-obesity program,the government levies an excise tax on high-fat foods.We expect consumers to pay almost all of this tax if demand is _____ and supply is _____.

Question

Quizplus · Accepted Answer

When demand is inelastic, consumers are less sensitive to price changes and will continue to buy the product despite price increases, such as those caused by a tax. When supply is elastic, producers can more easily change their production levels and are less likely to absorb the cost of the tax, passing it on to consumers instead.

As Part of an Anti-Obesity Program,the Government Levies an Excise