Question

When supply is elastic, who pays more tax and who pays less?

Answer 1

When supply is elastic, sellers are able to adjust their quantity supplied in response to changes in price. This means that sellers bear the burden of the tax in the form of lower prices received for their goods and services. As a result, they ultimately pay more tax. On the other hand, buyers pay less tax, as they are able to purchase goods and services at lower prices due to the downward pressure on prices caused by the tax.