If the demand for apples is highly elastic and the supply is highly inelastic, then a tax imposed on apples will be paid:
A)largely by the sellers of apples with more elastic supply.
B)largely by the buyers of apples with more elastic demand.
C)equally by the sellers and buyers of apples.
D)largely by the sellers of apples with less elastic supply.
E)largely by the buyers of apples with unit elastic demand.

Question

Quizplus · Accepted Answer

When the demand for a product is highly elastic, consumers are very sensitive to price changes and will significantly reduce their quantity demanded if the price increases. On the other hand, when the supply is highly inelastic, producers cannot easily change the quantity supplied in response to price changes. In this scenario, because producers cannot easily adjust their supply, they will bear a larger portion of the tax burden, as they are less able to pass the tax on to consumers in the form of higher prices.

If the Demand for Apples Is Highly Elastic and the Supply