If a tax is imposed on a market with elastic demand andinelastic supply:
A)buyers will bear most of the burden of the tax.
B)sellers will bear most of the burden of the tax.(True Answer )Correct
C)the burden of the tax will be shared equally between buyers and sellers.
D)there is no way to determine how the burden of the tax will be shared.

Question

Quizplus · Accepted Answer

When demand is elastic and supply is inelastic, buyers are more sensitive to price changes than sellers. Therefore, sellers are not willing or able to adjust their prices much, and as a result, they are able to pass most of the tax burden onto buyers in the form of higher prices. This means that sellers will bear most of the burden of the tax.

If a Tax Is Imposed on a Market with Elastic