ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Calculate the percentage of the tax borne by the demander and supplier in each of the following cases:
Instructions: Enter your responses rounded to the nearest whole number.
| Elasticity of demand |
Elasticity of supply |
Percent borne by demander | Percent borne by supplier | |
| a. | ED = 0.1 | ES = 0.5 | % | % |
| b. | ED = 1.0 | ES = 2.0 | % | % |
| c. | ED = 1.3 | ES = 0.9 | % | % |
| d. | ED = 1.9 | ES = 0.7 | % | % |
e. Summarize your findings regarding relative elasticity and tax burden.
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Consumers bear a greater portion of the tax burden because consumers choose to buy the good.
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Whichever group (producers or consumers) has the lower elasticity bears the greater portion of the tax burden.
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Whichever group (producers or consumers) has the higher elasticity bears the greater portion of the tax burden.
-
Producers usually bear a greater portion of the tax burden because the government generally levies more taxes on producers.
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