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The Government Proposes a Tax on Flowers in Order to Boost

Question 172

Multiple Choice

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.

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