Suppose the demand for gasoline is inelastic,but not perfectly inelastic,and the supply is elastic,but not perfectly elastic.A tax on gasoline is paid
A)mostly by buyers.
B)mostly by sellers.
C)equally by buyers and sellers.
D)totally by buyers.
E)totally by sellers.

Question

Quizplus · Accepted Answer

Since the demand for gasoline is inelastic, buyers will not reduce their quantity demanded by a significant amount in response to the tax. Therefore, they will end up paying most of the tax. On the other hand, since the supply is elastic, sellers will be able to shift some of the burden of the tax onto buyers in the form of higher prices. However, due to the inelastic demand, sellers will not be able to shift the entire burden of the tax onto buyers. As a result, the majority of the tax will be paid by buyers.

Suppose the Demand for Gasoline Is Inelastic,but Not Perfectly Inelastic,and