Buyers bear a greater share of a tax burden when a tax is imposed in a market where:
A) demand is more elastic than supply.
B) supply is more elastic than demand.
C) the tax is imposed on sellers.
D) the tax is imposed on buyers.

Question

Quizplus · Accepted Answer

When supply is more elastic than demand, the supplier will be able to adjust prices more easily based on changes in their cost. As a result, they will be able to shift a larger portion of the tax burden to the buyer, who will end up paying a higher price for the good.

Buyers Bear a Greater Share of a Tax Burden When