The question of who pays the greater amount of a commodity tax is determined by:
A) Congress.
B) the President of the United States.
C) the relative elasticities of demand and supply.
D) the individual who writes the check for the tax.

Question

Quizplus · Accepted Answer

The relative elasticities of demand and supply determine who pays the greater amount of a commodity tax. If the demand for the product is more elastic than the supply, the burden of the tax will fall mostly on the supplier. On the other hand, if the supply is more elastic than the demand, the tax burden will fall mostly on the consumers. Therefore, the answer is C.

The Question of Who Pays the Greater Amount of a Commodity