Suppose that the price elasticity of demand is relatively elastic and the price elasticity of supply is relatively inelastic in a specific market.If an excise tax is imposed on this good,who will bear the greater burden of the tax?

Question

Quizplus · Accepted Answer

When demand is relatively elastic and supply is relatively inelastic, producers will bear a greater burden of the tax because they are less able to change their quantity supplied in response to price changes, while consumers can more easily change their quantity demanded.

Suppose That the Price Elasticity of Demand Is Relatively Elastic