For a given demand curve, the greater the price elasticity of supply, the more of the tax burden is shifted onto buyers.

Question

Quizplus · Accepted Answer

The correct answer is true because when the price elasticity of supply is greater, the supply curve is more elastic, which means that a small change in price will lead to a large change in quantity supplied. This means that the tax burden will be shifted onto buyers because the suppliers will be able to pass on more of the tax to the buyers by increasing the price.

For a Given Demand Curve, the Greater the Price Elasticity