## Question

###### The economic burden of a tax is borne mostly by: buyers if demand is highly elastic....

The economic burden of a tax is borne mostly by: buyers if demand is highly elastic. O buyers if demand is highly ir plastic. buyers in all cases. sellers in all cases,

## Answers

The correct option is buyers if demand is highly inelastic.

The economic burden of tax is borne mostly by the buyers if demand is highly inelastic.

It is because tax incidence depends upon the elasticity of demand and supply. When demand is more inelastic , buyers bear most of the tax burden. In case supply is more inelastic, suppliers bear most of the tax burden.

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