Based on the concept of elasticity, if the Super Bowl is played in Mile High Stadium,...

Based on the concept of elasticity, if the Super Bowl is played in Mile High Stadium, with a maximum seating of 74,000 seats, who would pay the seating tax of $5/seat?

Question 4 options:

	The seller.
	The seller would pay part of it, the buyers pay the rest.
	The City of Denver.
	The buyers.

Expert Solution

Ans) When government imposes tax, burden is shared by both buyers and sellers. Who will bear greater burden of tax depends upon the elasticity of demand and supply. Accordingly, less elastic side of the market bears greater burden of tax.

If any side is Perfectly inelastic, full burden of tax will fall upon that side.

The number of seats in the stadium are fixed i.e supply is inelastic. Therefore, sellers will bear burden of tax.

Option a.

Rahul Sunny answered 2 years ago

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