The more inelastic is demand,ceteris paribus:
A) the larger the welfare cost of a given tax.
B) the larger the proportion of the burden of a given tax borne by the sellers.
C) the larger the proportion of the burden of a given tax borne by the buyers.
D) the smaller amount of revenue generated by the tax.

Question

Quizplus · Accepted Answer

When demand is more inelastic, buyers are less responsive to price changes, so they bear a larger proportion of the tax burden.

The More Inelastic Is Demand,ceteris Paribus