When the demand for a product is less elastic than the supply,
A)consumers pay the majority of the tax on the product.
B)firms pay the majority of the tax on the product.
C)firms pay the entire tax on the product.
D)consumers pay the entire tax on the product.

Question

Quizplus · Accepted Answer

When demand is less elastic than supply, it means that consumers are less responsive to changes in price than the suppliers. As a result, if a tax is imposed on the product, the suppliers can pass on the majority of the burden of the tax to consumers in the form of higher prices. So, consumers pay the majority of the tax on the product.

When the Demand for a Product Is Less Elastic Than