Refer to Exhibit 4. Which of the following is true with regard to the burden of the tax in Exhibit 4 ?

Question

Refer to Exhibit 4. Which of the following is true with regard to the burden of the tax in Exhibit 4 ?

Answer 1

A. The buyers pay a larger portion of the tax because demand is more inelastic than supply
B. The sellers pay a larger portion of the tax because supply is more elastic than demand
C. The buyers pay a larger portion of the tax because demand is more elastic then supply
D. The sellers pay a larger portion of the tax because supply is more inelastic than demand

Correct Answer: The sellers pay a larger portion of the tax because supply is more inelastic than demand ✔

Last Updated: June 18, 2019