Asked by
Christo Delport
on Dec 11, 2024Verified
The actual burden of a tax
A) falls most heavily on the side of the market that is more elastic.
B) falls most heavily on the side of the market that is more inelastic.
C) falls most heavily on the side of the market that is closest to unitary elasticity.
D) is distributed independently of relative elasticities of supply and demand.
Tax Burden
The measure of the total taxes paid by an individual, corporation, or another entity relative to its income, assets, or consumption levels.
Elastic
A characteristic of a good or service that indicates a greater than proportional change in quantity demanded or supplied in response to price changes.
Inelastic
Describes demand or supply that is relatively unresponsive to price changes, meaning quantity demanded or supplied changes little when price changes.
- Elucidate the role played by the elasticity of demand and supply in determining the allocation of a tax's burden.
Verified Answer
AE
Learning Objectives
- Elucidate the role played by the elasticity of demand and supply in determining the allocation of a tax's burden.