consider-a-market-with-inelastic-supply-and-elastic-demand-how-would-a-tax-affec

Question

Consider a market with inelastic supply and elastic demand. How would a tax affect the distribution of tax burden, and why?

Accepted Answer

Consumers bear less of the tax burden because the demand is elastic, meaning they can easily reduce quantity demanded.

Answer

Producers bear less of the tax burden because the supply is inelastic, meaning they cannot easily reduce quantity supplied.

Answer

Both consumers and producers share the tax burden equally due to equal elasticity.

Answer

Neither consumers nor producers bear the tax burden due to perfect elasticity.