Suppose the elasticity of supply of land is 0 and elasticity of demand is 2.If the government imposes a 10 percent tax on land,then
A) buyers and sellers each pay 5 percent of the tax.
B) buyers pay all of the tax.
C) sellers pay all of the tax.
D) sellers pay a smaller share of the tax than do buyers but both buyers and sellers pay some of the tax.
E) buyers pay 1/2 of the tax.

Question

Quizplus · Accepted Answer

When the elasticity of supply is zero, it means that the quantity supplied is fixed regardless of changes in price. Therefore, the burden of the tax falls entirely on the suppliers, causing them to bear the full cost of the tax. On the other hand, the higher elasticity of demand indicates that buyers are more sensitive to price changes, making it less likely that they will pass on the tax burden to the sellers by accepting higher prices. Therefore, sellers are the only ones who will pay the tax. Thus, option C is the correct answer.

Suppose the Elasticity of Supply of Land Is 0 and Elasticity