On which side of the market does a tax burden fall most heavily

Question

Quizplus · Accepted Answer

A tax burden falls most heavily on the side of the market that is more inelastic. When demand or supply is inelastic, it means that the quantity demanded or supplied does not change much in response to changes in price. Therefore, when a tax is imposed, the buyers or sellers cannot easily adjust their behavior to avoid the tax, and end up bearing most of the burden themselves. On the other hand, if demand or supply is elastic, a tax will lead to a larger shift in behavior, such as reducing purchases or production, and the burden may be shared more equally between buyers and sellers.

On Which Side of the Market Does a Tax Burden