Buyers of a good will bear the larger part of the tax burden, and sellers will bear a smaller part of the tax burden, when the
A)tax is placed on the sellers of the good.
B)tax is placed on the buyers of the good.
C)supply of the product is more elastic than the demand for the good.
D)demand for the product is more elastic than the supply of the good.

Question

Buyers of a good will bear the larger part of the tax burden, and sellers will bear a smaller part of the tax burden, when the
A)​tax is placed on the sellers of the good.
B)​tax is placed on the buyers of the good.
C)​supply of the product is more elastic than the demand for the good.
D)​demand for the product is more elastic than the supply of the good.

Quizplus · Accepted Answer

When the supply of a product is more elastic than the demand for the good, buyers will bear a larger part of the tax burden. This is because sellers can more easily adjust their quantity supplied in response to the tax, shifting the burden to buyers who have a less elastic demand and thus are less responsive to price changes.

Buyers of a Good Will Bear the Larger Part of the Tax