When more of tax on a product is borne by the buyer than the seller,...
ECONOMICS
WAEC 2023
When more of tax on a product is borne by the buyer than the seller, the commodity involved has
- A. perfectly elastic demand
- B. perfectly inelastic demand
- C. fairly inelastic demand
- D. elastic demand
Correct Answer: C. fairly inelastic demand
Explanation
The answer is inelastic demand. When the demand for a commodity is inelastic, the buyers are less sensitive to changes in price. This means that they will continue to buy the same amount of the commodity even if the price increases. As a result, the burden of the tax will be borne by the buyers.
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