For a given supply curve of gasoline, the less elastic the demand, the larger the fraction of an excise tax that is borne by consumers.

Question

Quizplus · Accepted Answer

When demand is less elastic, consumers are less responsive to price changes, meaning they will continue to buy gasoline even as prices rise due to an excise tax. As a result, consumers end up bearing a larger fraction of the tax burden.

For a Given Supply Curve of Gasoline, the Less Elastic