If the demand for apples is highly elastic and the supply is highly inelastic, then if a tax is imposed on apples it will be paid:
A)largely by the sellers of apples.
B)largely by the buyers of apples.
C)equally by the sellers and buyers of apples.
D)by the government.

Question

If the demand for apples is highly elastic and the supply is highly inelastic, then if a tax is imposed on apples it will be paid:
A)​largely by the sellers of apples.
B)​largely by the buyers of apples.
C)​equally by the sellers and buyers of apples.
D)​by the government.

Quizplus · Accepted Answer

When demand is highly elastic, consumers are very responsive to price changes and can easily switch to substitutes if the price of apples increases. On the other hand, if supply is highly inelastic, producers cannot easily adjust the quantity supplied in response to price changes. Therefore, in this scenario, the burden of the tax falls largely on the sellers because they have less flexibility to pass the tax onto consumers through higher prices.

If the Demand for Apples Is Highly Elastic and the Supply