If the market supply curve of a commodity is more elastic than its market demand curve,tax incidence is likely to fall ________.

Question

Quizplus · Accepted Answer

When the market supply curve is more elastic than the demand curve, it means that producers are more responsive to changes in price than consumers. Therefore, when a tax is imposed, producers are more likely to reduce their supply, resulting in a smaller increase in price. As a result, consumers will bear a smaller share of the tax burden, and producers will bear more of it. Therefore, tax incidence is likely to fall more on consumers than on producers.

If the Market Supply Curve of a Commodity Is More