If a nation imposes a tariff on imports, the portion of the tax paid by citizens depends upon
A)elasticity of demand.
B)elasticity of supply.
C)how important the good is.
D)income elasticity.
E)cross elasticity of demand with domestic products.

Question

Quizplus · Accepted Answer

The portion of the tax paid by citizens depends upon the elasticity of demand. If the demand for the imported good is elastic, then the burden of the tax will mostly fall on the producer because they will have to lower the price due to a decrease in demand. However, if the demand for the imported good is inelastic, then the burden of the tax will mostly fall on the consumers because they will continue to buy the good at a higher price despite the tax.

If a Nation Imposes a Tariff on Imports, the Portion