If the demand for a good is highly elastic, then imposing an excise tax on that...

Question

Question

If the demand for a good is highly elastic, then imposing an excise tax on that good will

a. lead to a minor decrease in price.

b. result in a large increase in quantity.

c. mostly burden producers.

d. mostly burden consumers.

business economics

Answer 1

Answer #1

c. mostly burden producers. - is correct

Burden of tax falls on relatively inelastic side of the market. Since demand is highly elastic, most of the burden of tax falls on producers.

Answer 2

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