A tax is imposed on orange juice. Consumers will bear more of the burden of the tax:
A)If the demand for orange juice is relatively inelastic and the supply is relatively elastic.
B)If the demand for orange juice is relatively elastic and the supply is relatively inelastic.
C)If the supply for orange juice is perfectly inelastic.
D)none of the above

Question

A tax is imposed on orange juice. Consumers will bear more of the burden of the tax:
A)​If the demand for orange juice is relatively inelastic and the supply is relatively elastic.
B)​If the demand for orange juice is relatively elastic and the supply is relatively inelastic.
C)​If the supply for orange juice is perfectly inelastic.
D)​none of the above

Quizplus · Accepted Answer

When demand is relatively inelastic and supply is relatively elastic, consumers are less sensitive to price changes and cannot easily switch to alternatives, thus bearing more of the tax burden. Conversely, suppliers can more easily adjust their quantity supplied, passing more of the tax burden to consumers.

A Tax Is Imposed on Orange Juice