Question

If the demand curve is very elastic and the supply curve is very inelastic in a market, then the sellers will bear a greater burden of a tax imposed on the market, even if the tax is imposed on the buyers.

A. True
B. False

Answer 1

Answer:

Option B

Explanation:

If the demand curve is elastic that means a small change in price will lead to greater change in the quantity demanded

On the other hand if supply curve is very inelastic that means change in price will not have grater impact on the supply.

Therefore, the burden of increase tax will be borne by buyers not on the suppliers because suppliers are less affected in this case.