Asked by Martin Thompson on Jun 30, 2024
Verified
A tax burden falls more heavily on the side of the market that is less elastic.
Elastic
Describes a situation in economics where the supply or demand for a good or service is sensitive to changes in price. In other words, a small change in price results in a larger change in quantity demanded or supplied.
Tax Burden
The measure of the total amount of taxes that an individual or business must pay, relative to their income or profit.
- Understand how the distribution of tax burden varies across markets with different elasticities.
- Analyze the aspects that influence the distribution of taxation between consumers and merchants.
Verified Answer
ZK
Zybrea KnightJul 04, 2024
Final Answer :
True
Explanation :
The tax burden falls more heavily on the side of the market that is less elastic because that side of the market is less responsive to price changes and therefore cannot easily avoid the tax by changing the quantity bought or sold.
Learning Objectives
- Understand how the distribution of tax burden varies across markets with different elasticities.
- Analyze the aspects that influence the distribution of taxation between consumers and merchants.