Suppose that the demand for pasta is price inelastic and the supply of pasta is price elastic,and that the demand for gasoline is price inelastic and the supply of gasoline is price elastic.If a tax were levied on the sellers of both of these commodities,who would we expect to have to pay most of the tax

Question

Quizplus · Accepted Answer

When demand is price inelastic, buyers are less sensitive to price changes and will bear most of the tax burden. Since both pasta and gasoline have inelastic demand, buyers of both goods will pay most of the tax.

Suppose That the Demand for Pasta Is Price Inelastic and the Supply