Suppose the demand for pizza is inelastic and the supply ofpizza is elastic, and the demand for cigarettes is inelastic andthe supply of cigarettes is elastic. If a tax were levied on thesellers of both of these commodities, we would expect that theburden of:
A)the pizza tax would fall more heavily on sellers than on buyers, and the burden of the cigarette tax would fall more
Heavily on buyers than on sellers.
B)the pizza tax would fall more heavily on buyers than on sellers, and the burden of the cigarette tax would fall more
Heavily on sellers than on buyers.
C)both the pizza and the cigarette taxes would fall more heavily on buyers than on sellers.
D)both the pizza and the cigarette taxes would fall more heavily on sellers than on buyers.

Question

Quizplus · Accepted Answer

When demand is inelastic and supply is elastic, the tax burden falls more heavily on buyers. Since both pizza and cigarettes have inelastic demand and elastic supply, buyers will bear more of the tax burden in both cases.

Suppose the Demand for Pizza Is Inelastic and the Supply