A tax levied on each unit produced will likely be shifted forward and backward depending upon the elasticities of demand and supply.

Question

Quizplus · Accepted Answer

If demand is more elastic than supply, the burden of the tax will be shifted forward onto consumers in the form of higher prices. If supply is more elastic than demand, the burden of the tax will be shifted backward onto producers in the form of lower prices for the product.

A Tax Levied on Each Unit Produced Will Likely Be