Buyers of a good bear the larger share of the tax burden when a tax is placed on a product for which: a. the supply is more elastic than the demand. b. the demand is more elastic than the supply. c. the tax is placed on the sellers of the product. d. the tax is placed on the buyers of the product.
Added by Robert H.
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Step 1: Identify the key concept in the question, which is that buyers bear a larger share of the tax burden when the tax is placed on a product for which the supply is more elastic than the demand. Show more…
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To determine who bears the greater share of a tax, we compare the elasticity of supply to the elasticity of demand, the pre-tax quantity to the post-tax quantity, the government tax revenue to the revenue collected by the suppliers, the size of the tax to the price of the good, and the number of buyers to the number of sellers.
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If the demand curve is more elastic than the supply curve, and a tax is imposed, which of the following will happen? The seller will bear more of the burden of the tax. The consumer will bear more of the burden of the tax. A shortage will be created. The price will rise by the amount of the tax.
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