Figure 6-16
Panel (a)Panel (b) Panel (c)
-Refer to Figure 6-16.In which market will the majority of the tax burden fall on buyers?

Question

Figure 6-16
Panel (a)Panel (b)   Panel (c) 
-Refer to Figure 6-16.In which market will the majority of the tax burden fall on buyers?

Quizplus · Accepted Answer

In market (b), the demand curve is more inelastic compared to the other two markets. Therefore, when a tax is imposed, the price increase will be borne mainly by the buyers, and the majority of the tax burden will fall on them. In markets (a) and (c), the demand curve is more elastic, resulting in a more significant price increase for the sellers, and they will bear the majority of the tax burden.