If the price elasticity of demand is _____ the price elasticity of supply, then buyers will have a _____ tax incidence than sellers have.
A) more elastic than; smaller
B) less elastic than; smaller
C) equal to; smaller
D) more elastic than; higher

Question

Quizplus · Accepted Answer

When the price elasticity of demand is more elastic than the price elasticity of supply, it means consumers are more responsive to price changes than sellers. As a result, sellers bear a larger portion of the tax burden, leading to a smaller tax incidence for buyers.

If the Price Elasticity of Demand Is _____ the Price