If the demand for a good is more elastic than its supply,...
If the demand for a good is more elastic than its supply, the tax burden is borne
Equally by consumers and producers
More by producers
More by consumers
More by retailers and producers
Correct answer is B
If the demand for a good is elastic it means a change in price would affect a change in quantity demanded.
Now if the demand for that good is more elastic than its supply, the tax burden is borne by the producer. This is because, when there is an increase in price it will lead to a decrease in the quantity demanded, consumers would most likely move on to consume a substitute, hence the producer of that product would be left to bear the burden of any other additional increment in taxes or running cost.
The international production set for Nigeria and Austria is: \(\begin{array}{c|c} Products &...
Government of West African countries levy taxes to ...
From the table above, find the values of E and F respectively ...
When the government imposes a unit tax on a commodity with perfectly inelastic demand, the ...
One major function of the entrepreneur is ...
The basic economic problems of society include__________ ...
A large standard deviation is an indication of ...
The main source of government revenue in Nigeria is ...
The type of business finance that entitles the holder to a fixed rate of dividend is ...