Unformatted text preview: (a tax on sales) – the producer or the consumer x But economists know that the true burden of the tax falls more heavily on the one who has a lower elasticity of supply/demand If the consumer’s demand is very inelastic and the producer’s supply is very elastic, then the consumer bears more of the tax burden. If the consumer’s demand is very elastic and the producer’s supply is very inelastic, then the producer bears more of the tax burden. Page 53...
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- Fall '10
- Supply And Demand, producer, tax burden