Question

suppose that the government imposes a specific excise tax on product x of $8 per unit and that the price elasticity of demand for x is unitary

Answer 1

If the supply curve is less elastic than the demand curve, the tax burden is borne more heavily by the sellers.

What does supply curve mean?

The link between product pricing and the amount of product a seller is willing and able to supply is graphically represented by the supply curve in economics. The graph's vertical axis represents product pricing, while its horizontal axis represents the amount of the product delivered.

Why does the supply curve have a rising slope?

The supply curve slopes higher because firms are often more driven to create a good as its price rises. The cost of production also has a tendency to rise when output rises since businesses are efficient and will use up the cheapest manufacturing inputs first.

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