Questions: Consider the market below. If a tax was imposed on this market, buyers would bear more of the tax burden. This is because the demand curve is more inelastic than the supply curve.

Consider the market below.

If a tax was imposed on this market, buyers would bear more of the tax burden.
This is because the demand curve is more inelastic than the supply curve.

Transcript text: Consider the market below. If a tax was imposed on this market, buyers $\checkmark$ would bear more of the tax burden. This is because the demand curve is more inelastic $\checkmark$ than the supply curvel

Solution

Solution Steps

Step 1: Identify the Elasticity of Demand and Supply

The demand curve (D) is steeper than the supply curve (S).
A steeper curve indicates that the demand is more inelastic compared to the supply.

Step 2: Determine the Tax Burden Distribution

When a tax is imposed, the side of the market that is more inelastic bears a greater burden of the tax.
Since the demand curve is more inelastic, buyers will bear more of the tax burden.

Step 3: Confirm the Reasoning

The reason buyers bear more of the tax burden is that the demand curve is more inelastic than the supply curve.

Final Answer

If a tax was imposed on this market, buyers would bear more of the tax burden. This is because the demand curve is more inelastic than the supply curve.

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