When supply and demand are linear curves,the incidence of the tax depends on the slopes of the demand and supply curves.

Question

Quizplus · Accepted Answer

When supply and demand are linear curves, the incidence of the tax depends on the slopes of the demand and supply curves. Specifically, the more inelastic curve will bear a larger portion of the tax burden, while the more elastic curve will bear a smaller portion of the tax burden.

When Supply and Demand Are Linear Curves,the Incidence of the Tax