When a good with equally elastic demand and supply is taxed,the incidence of the tax is borne

Question

Quizplus · Accepted Answer

In a case of equally elastic demand and supply, the tax incidence is equally divided between producers and consumers. This implies that both parties share the burden of the tax to a certain extent. However, the extent to which each party bears the tax burden depends on the elasticity of demand and supply. If the demand is more elastic than supply, then consumers bear most of the tax burden, while the opposite is the case if supply is more elastic than demand.

When a Good with Equally Elastic Demand and Supply Is