Neither the demand nor the supply of sugar is perfectly elastic or inelastic.If the government imposes a 5 percent tax on sugar,the

Question

Quizplus · Accepted Answer

Since both demand and supply of sugar are inelastic, the tax burden will be shared by both the buyers and the sellers. Therefore, the price increase for buyers will be less than the full 5 percent tax. The extent of the price increase will depend on the specific shapes of the demand and supply curves.

Neither the Demand nor the Supply of Sugar Is Perfectly