Chapter 50, Problem 4MCQ

To determine

The time when the excise tax mainly paid by producers.

Explanation of Solution

An excise tax will be paid mainly by producers at the time when the price elasticity of supply is low and the price elasticity of demand is high because the burden of tax highly falls on producers. Therefore, the correct option is c.

Economics Concept Introduction

Introduction:

A tax that is levied on sale of certain goods by the government is called excise tax.

Elasticity of demand represents the measure of sensitivity of demand to price that shows how change in price or supply of goods affects the quantity demanded.