For a given supply elasticity,the more inelastic the demand for a good,the larger the share of the tax paid by the
A) buyers.
B) sellers.
C) participants other than the buyers and sellers.
D) government.
E) None of the above answers is correct.

Question

Quizplus · Accepted Answer

In the case of an inelastic demand, buyers are less responsive to changes in price. Therefore, if a tax is imposed on the good, the buyers will bear a larger burden of the tax because they are less likely to decrease their quantity demanded in response to the increase in price. This means that the share of the tax paid by the buyers will be larger.

For a Given Supply Elasticity,the More Inelastic the Demand for a Good,the