When the inelasticities of demand and supply are equal,the tax burden will be borne
A)entirely by the seller.
B)mostly by the seller.
C)equally.
D)mostly by the buyer.
E)entirely by the buyer.

Question

Quizplus · Accepted Answer

When the inelasticities of demand and supply are equal, the tax burden is shared equally between the buyer and the seller. This means that both parties are affected equally by the tax and neither can avoid paying it entirely. However, it is worth noting that this assumes that the market is perfectly competitive, and that there are no other factors, such as government subsidies or externalities, that could impact the incidence of the tax.

When the Inelasticities of Demand and Supply Are Equal,the Tax