Suppose a tax is imposed on the buyers of fast-food French fries.The burden of the tax will

Question

Quizplus · Accepted Answer

The burden of the tax will be shared by both buyers and sellers of fast-food French fries but not necessarily equally. The incidence of the tax will depend on the relative elasticities of demand and supply. If demand for fast-food French fries is more elastic than the supply, then the burden of the tax will fall more heavily on the sellers. If supply is more elastic than demand, then the burden of the tax will fall more heavily on the buyers. If demand and supply are equally elastic, then the burden of the tax will be shared equally between buyers and sellers.

Suppose a Tax Is Imposed on the Buyers of Fast-Food