All other things equal,consumers bear more of a tax as demand becomes more _____ and supply becomes more _____.

Question

Quizplus · Accepted Answer

When demand is inelastic, consumers are less sensitive to price changes and thus cannot easily shift the burden of the tax onto producers. Similarly, when supply is elastic, producers can more easily adjust their prices to shift the burden of the tax onto consumers by reducing the quantity supplied. Therefore, as demand becomes more inelastic and supply becomes more elastic, consumers bear more of the tax burden.

All Other Things Equal,consumers Bear More of a Tax as Demand