Suppose the demand for picture frames is inelastic and the supply of picture frames is elastic.A tax of $1 per frame levied on buyers of picture frames will increase the equilibrium price paid by buyers of picture frames by

Question

Quizplus · Accepted Answer

When demand is inelastic and supply is elastic, the tax burden falls more on buyers. However, since the supply is elastic, the price increase will be less than the full $1 tax but more than $0.50.

Suppose the Demand for Picture Frames Is Inelastic and the Supply