The burden of a per-unit tax will fall disproportionately on consumers when the supply curve is relatively more elastic than the demand curve.

Question

Quizplus · Accepted Answer

When the supply curve is more elastic than the demand curve, producers can more easily shift the burden of the tax onto consumers by decreasing the quantity supplied and increasing the price. Consumers, on the other hand, will be less willing to purchase the product at the higher price, leading to a greater decline in quantity demanded. This results in a greater burden of the tax falling on the consumers.

The Burden of a Per-Unit Tax Will Fall Disproportionately on Consumers