The government proposes a tax on flowers in order to boost its revenue. If the elasticity of demand is 1.3 and the elasticity of supply is 0.7:
A) Consumers will bear the majority of the burden of the tax.
B) Producers will bear the majority of the burden of the tax.
C) Consumers and producers will bear equal shares of the burden of the tax.
D) It does not tell us enough to reveal whether consumers or producers will bear most of the burden of the tax.
Correct Answer:
Verified
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