When supply and demand are equally elastic,
A) producers carry the majority of the tax burden.
B) consumers carry the majority of the tax burden.
C) producers and consumers carry an equal amount of the tax burden.
D) consumers carry all of the tax burden.

Question

Quizplus · Accepted Answer

When supply and demand are equally elastic, the tax burden is shared equally between producers and consumers. This is because any increase in the price of the product due to the tax will likely cause an equal decrease in the quantity demanded and supplied, meaning both parties will experience a similar level of loss.

When Supply and Demand Are Equally Elastic