The side of the market that will bear a greater share of the tax burden is the side that:

Question

Quizplus · Accepted Answer

The side of the market that is more inelastic will bear a greater share of the tax burden because they are less responsive to changes in price. In other words, they will continue to purchase or sell the good/service even with the tax, meaning they cannot easily avoid the tax burden. On the other hand, the side of the market that is more elastic (option A and C) will be more responsive to changes in price and may reduce their consumption or production of the good/service in response to the tax. The statutory burden of the tax (option D) only indicates who is legally responsible for paying the tax, but does not determine who will ultimately bear the burden of the tax.

The Side of the Market That Will Bear a Greater