If a good is elastic, such as jewelry, and a tax is imposed The buyer and...

If a good is elastic, such as jewelry, and a tax is imposed The buyer and the seller will share the tax burden The seller pays the tax, in total The buyer pays the tax, in total Demand will increase

Expert Solution

Seller pays the tax

The elasticity of demand and supply curve decides whether buyer will pay tax or consumer will pay or both will share. Whichever curve is inelastic that will pay more as it changes quantity quite less because of large change in price.

If demand curve is elastic, the tax burden will be borne by producers only as shown below.

Rahul Sunny answered 2 years ago

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