When the demand for a product is less elastic than the supply, consumers pay the majority of the tax on the product.

Question

Quizplus · Accepted Answer

When the demand is less elastic than supply, it means that consumers are less responsive to changes in price, which means they will bear a greater portion of a tax. This is because suppliers can raise the price without losing many customers, and therefore pass on the burden of the tax to consumers.

When the Demand for a Product Is Less Elastic Than