The share of the burden of an emissions tax on output borne by the consumer of the polluting output will rise as
A)the tax rises.
B)demand elasticity falls.
C)demand elasticity rises.
D)the tax falls.

Question

Quizplus · Accepted Answer

The share of the burden of an emissions tax on output borne by the consumer will rise as demand elasticity falls because less elastic demand means consumers are less sensitive to price changes, making them more likely to bear the cost of the tax.

The Share of the Burden of an Emissions Tax on Output