The more inelastic are demand and supply, the

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When demand and supply are more inelastic, it means that consumers and producers are less responsive to changes in price. In this case, an excise tax will not significantly change the quantity demanded or supplied, and the market will remain relatively unchanged. Therefore, the efficiency loss of an excise tax will be smaller, as it will not create a significant distortion in the market. This also means that the proportion of the tax paid by consumers and producers will be more evenly distributed, with neither party taking on a larger burden.

The More Inelastic Are Demand and Supply, the