In general, tax incidence falls more on the seller if demand for the product taxed is price elastic and falls more on the buyer if demand is price inelastic.

Question

Quizplus · Accepted Answer

When demand is price elastic, consumers are more responsive to price changes, so sellers bear more of the tax burden. Conversely, when demand is price inelastic, consumers are less responsive to price changes, so they bear more of the tax burden.

In General, Tax Incidence Falls More on the Seller If