Use the figure A Tax on the Demand for a Good II. A $6 excise tax has been placed on this market. What can be concluded based on tax incidence in this market?

Figure: A Tax on the Demand for a Good II

A) The price elasticity of demand is smaller than the price elasticity of supply.
B) The price elasticity of demand is larger than the price elasticity of supply.
C) The price elasticity of supply is equal to the price elasticity of demand.
D) The entire burden of the tax falls on the buyers of this good.

Question

Use the figure A Tax on the Demand for a Good II. A $6 excise tax has been placed on this market. What can be concluded based on tax incidence in this market?
​
Figure: A Tax on the Demand for a Good II

A) The price elasticity of demand is smaller than the price elasticity of supply. 
B) The price elasticity of demand is larger than the price elasticity of supply. 
C) The price elasticity of supply is equal to the price elasticity of demand. 
D) The entire burden of the tax falls on the buyers of this good.

Quizplus · Accepted Answer

The Answer of Use the figure A Tax on the Demand for a Good II. A $6 excise tax has been placed on this market. What can be concluded based on tax incidence in this market?
​
Figure: A Tax on the Demand for a Good II

A) The price elasticity of demand is smaller than the price elasticity of supply. 
B) The price elasticity of demand is larger than the price elasticity of supply. 
C) The price elasticity of supply is equal to the price elasticity of demand. 
D) The entire burden of the tax falls on the buyers of this good.

Use the Figure a Tax on the Demand for a Good