The proportion of the tax burden that falls on consumers depends on

Question

Quizplus · Accepted Answer

The proportion of the tax burden that falls on consumers depends on both the price elasticity of demand and the price elasticity of supply. If the demand for a good is relatively inelastic, consumers will bear more of the tax burden. If the supply of the good is relatively inelastic, producers will bear more of the tax burden. Therefore, both A (price elasticity of demand) and C (price elasticity of supply) are correct choices.

The Proportion of the Tax Burden That Falls on Consumers