The demand for salt is inelastic, and the supply of salt is elastic. The demand for...

The demand for salt is inelastic, and the supply of salt is elastic. The demand for caviar is elastic, and the supply of caviar is inelastic. Suppose that a tax of $1 per pound is levied on the sellers of salt, and a tax of $1 per pound is levied on the buyers of caviar. We would expect that most of the burden of these taxes will fall on .

buyers of salt and the buyers of caviar.

buyers of salt and the sellers of caviar.

sellers of salt and the sellers of caviar.

sellers of salt and the buyers of caviar.

Expert Solution

Solution -

Option B.buyers of salt and the sellers of caviar. is Correct Option,

Reason -

The demand for salt is flexible and the supply of salt is flexible. The demand for caviar is flexible and the supply of caviar is flexible. Suppose that salt dealers have been taxed $ 1 per kilo and the taxpayers for cheaper have applied for a dollar tax of $ 1 per dollar. We expect that the burden of these taxes will be high. so above Option is correct Option .

Rahul Sunny answered 2 years ago

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