Which of the following is correct? A tax burden

Question

Quizplus · Accepted Answer

A tax burden falls more heavily on the side of the market that is less elastic. This is because in a less elastic market, there are fewer substitutes available, and consumers and producers are less responsive to changes in price, which means they are less likely to change their behavior in response to the tax. In contrast, in a more elastic market, consumers and producers are more responsive to price changes, which means they are more likely to change their behavior in response to the tax. As a result, a tax burden is likely to be passed on to the other side of the market in a more elastic market, while it is likely to be absorbed by the side of the market that is less elastic.

Which of the Following Is Correct? a Tax Burden