With regard to tax burdens, what does the ―elasticity = escape‖idea tell you?
A)that the curve (between demand and supply) that is relatively more elastic will bear less of the tax burden (True Answer
)Correct
B)that the curve (between demand and supply) that is relatively more inelastic will bear less of the tax burden
C)that the curve (between demand and supply) that is relatively more elastic will escape the tax burden entirely
D)that the ratio of the buyers' tax burden to the sellers' tax burden is always greater than 1

Question

Quizplus · Accepted Answer

The "elasticity = escape" idea tells us that the curve (either demand or supply) that is more elastic will bear less of the tax burden, as consumers or producers will be more likely to shift away from the taxed good to substitutes with relatively lower taxes. This means that the more elastic curve has more ability to "escape" the tax burden. Therefore, option A is the correct choice.

With Regard to Tax Burdens, What Does the ―Elasticity =