Use the following to answer questions :
Figure: Tax Incidence
-(Figure: Tax Incidence)Use Figure: Tax Incidence.All other things unchanged,when a good or service is characterized by a relatively elastic supply,as shown in panel _____,a greater share of the burden of an excise tax is borne by _____.

Question

Use the following to answer questions :
Figure: Tax Incidence 
-(Figure: Tax Incidence)Use Figure: Tax Incidence.All other things unchanged,when a good or service is characterized by a relatively elastic supply,as shown in panel _____,a greater share of the burden of an excise tax is borne by _____.

Quizplus · Accepted Answer

When a good or service is characterized by a relatively elastic supply, as shown in panel a, a greater share of the burden of an excise tax is borne by buyers. This is because the supply curve is relatively flat, meaning that a small change in price will lead to a large change in quantity supplied. As a result, the sellers will be able to pass on a larger share of the tax to the buyers.

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