Homework Answers
Tax incidence is higher on the relatively inelastic side.
If the demand is relatively inelastic compared to the supply, then the tax incidence is higher on the buyers/consumers.
If the supply is relatively inelastic compared to the demand, then the tax incidence is higher on the sellers/producers.
In the given question, the demand is more elastic and the supply is less elastic i.e., the supply is relatively inelastic compared to the demand. Hence, the tax incidence(burden) is higher on the producers/sellers
Ans: False
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