Suppose that the price elasticity of demand for milk is -0.4, while the price elasticity of supply of milk is 0.8. The government imposes a tax on milk. Based on this information, what do you think will happen regarding the tax incidence for milk?
@ Buyers and sellers will evenly split the tax burden.
Only buyers will pay the tax.
Only sellers will pay the tax.
@ Both buyers and sellers will pay the tax. However, buyers will pay more.
@ Both buyers and sellers will pay the tax. However, sellers will pay more.