For a given elasticity of demand,the less elastic the supply,the
A) larger the deadweight loss from a tax.
B) larger the share of a tax paid by the sellers.
C) greater the burden on the government from a tax.
D) greater is the excess burden from a tax.
E) larger the share of a tax paid by the buyers.

Question

Quizplus · Accepted Answer

When the supply is less elastic, it means that the sellers will have less ability to adjust their production and the supply will not increase as quickly in response to an increase in price. This means that when a tax is imposed, the sellers will have a harder time passing on the tax to the buyers and will end up shouldering a larger share of the tax burden. Therefore, the answer is B.

For a Given Elasticity of Demand,the Less Elastic the Supply,the