In a labor market in which demand is inelastic (but not perfectly inelastic)and supply is elastic (but not perfectly elastic),who bears a tax levied on the firms?

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Quizplus · Accepted Answer

In this scenario, since demand is inelastic, firms have some market power to pass on the tax burden to consumers in the form of higher prices. However, since supply is elastic, firms cannot pass on the entire tax burden to workers in the form of lower wages. Therefore, both the workers and the firms share the burden of the tax, with the firms bearing more of the burden relative to the workers.

In a Labor Market in Which Demand Is Inelastic (But