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Question 23 (1 point) Buyers bear a smaller incidence of the tax when;
O Demand is perfectly inelastic
O The statutory burden of the tax is on the sellers
O Supply is more elastic than demand
O The tax is higher
O Demand is more elastic than supply

Sagot :

Buyers bear a smaller incidence of the tax when Demand is more elastic than supply

The manner the tax burden is allocated between buyers and sellers is described as the tax incidence. The proportional price elasticity and demand influences the tax incidence. The preponderance of the tax burden falls on buyers when production is more flexible than demand. The proportional price elasticity and demand determines the tax incidence. The entirety of the tax burden falls upon purchasers when production is more elastic than demand. The less elastic the both supply and demand are, the higher the tax revenue. Someone and is unable to adjust to a dynamic pricing bears the brunt of a tax. As a result, when consumption is more inelastic, purchasers incur a greater weight, and then when supply is more elastic, sellers bear a greater burden.

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