Question

As price elasticity of demand increases, the burden of a tax gets _______; as price elasticity of supply increases, the burden of a tax gets _________.

(Here, you can read "bigger" as "heavier" and "smaller" as "lighter" if that helps.)

A. smaller; bigger

B. bigger; smaller

C. smaller; smaller

D. bigger; bigger

Answer 1

In the case of consumer,

As the Price elasticity of demand increases, the burden of a tax gets smaller; as the Price elasticity of supply increases, the burden of a tax gets bigger

In the Case of Producer.

As the Price elasticity of demand increases, the burden of a tax gets Bigger; as the Price elasticity of supply increases, the burden of a tax gets Smaller