The percentage of the burden of an excise tax that is borne by sellers generally depends on the
A)size of the tax.
B)relationship between the elasticity of demand and the elasticity of supply.
C)elasticity of demand.
D)elasticity of supply.

Question

Quizplus · Accepted Answer

The percentage of the burden of an excise tax that is borne by sellers generally depends on the relationship between the elasticity of demand and the elasticity of supply. If demand is relatively inelastic and supply is relatively elastic, then sellers will bear a smaller percentage of the burden of the tax. However, if demand is relatively elastic and supply is relatively inelastic, then sellers will bear a larger percentage of the burden of the tax. Therefore, the answer is B.

The Percentage of the Burden of an Excise Tax That