2651EconomicsMedium
Refer to Exhibit 4. Which of the following is true with regard to the burden of the tax in Exhibit 4?
AThe sellers pay a larger portion of the tax because supply is more inelastic than demand
BThe buyers pay a larger portion of the tax because demand is more inelastic than supply
CThe sellers pay a larger portion of the tax because supply is more elastic than demand
DThe buyers pay a larger portion of the tax because demand is more elastic then supply
Correct answer
A. The sellers pay a larger portion of the tax because supply is more inelastic than demand
Explanation
The correct answer is The sellers pay a larger portion of the tax because supply is more inelastic than demand.