Answer to Question #93740 in Macroeconomics for Lexie

Question

Which of the following statements is/are correct about the tax incidence?

a. If the price elasticity of demand for a good is relatively inelastic, the producers bear a greater tax burden than the consumers.
b. If the price elasticity of demand for a good is relatively elastic, the consumers bear a greater tax burden than the producers.
c. If the price elasticity of demand is unitary elastic, both the consumers and the producers bear an equal amount of the tax burden.

[1] All the statements are correct.
[2] Only a
[3] Only b
[4] Only c
[5] Only a and c

Answer 1

[4] Only c