Given the same price elasticity of supply, sellers would be able to pass along the largest portion of a 10 percent tax on which item?
A) Beef with a price elasticity of demand of 0.62
B) Pork with a price elasticity of demand of 0.73
C) Chicken with a price elasticity of demand of 0.32
D) D.Fish with a price elasticity of demand of 0.12

Question

Quizplus · Accepted Answer

The ability to pass on a tax to consumers depends on the price elasticity of demand. The less elastic (more inelastic) the demand, the more of the tax can be passed on to consumers. Fish, with a price elasticity of demand of 0.12, is the most inelastic among the options, allowing sellers to pass on the largest portion of the tax.

Given the Same Price Elasticity of Supply, Sellers Would Be