The tax incidence on buyers is higher if ________.

Question

Quizplus · Accepted Answer

The tax incidence on buyers is higher if the elasticity of the market supply curve is higher than the elasticity of the market demand curve. This is because when the supply curve is more elastic than the demand curve, sellers are able to shift a larger portion of the tax burden onto the buyers by raising prices. In this case, buyers have fewer alternatives to choose from and less ability to reduce their consumption, making them more sensitive to price changes and bearing a larger burden of the tax.

The Tax Incidence on Buyers Is Higher If ________