Answer to Question #287436 in Microeconomics for the uneducated

Question

Consider supply in the long run. Assume that a specific tax is imposed on a good that was   previously untaxed. How will the incidence of this tax change as time passes?  

Answer 1

When a tax is implemented in a market with inelastic supply, such as beachfront hotels, suppliers have no choice but to accept lower pricing for their products. Taxes have a minor impact on the equilibrium quantity. The sellers bear the tax burden in this situation. If supply was elastic and sellers could reorganize their operations to avoid selling the taxed commodity, the tax burden on sellers would be substantially lower, and the tax would result in a lot lower quantity sold rather than lower prices received.