Respuesta :
Answer:
the distribution of the tax burden between buyers and sellers.
Explanation:
Tax is a compulsory sum levied by the government on goods and services. it increases the price of goods and services
Economic tax incidence refers to who bears the burden of tax which is dependent on the elasticities of demand of the consumer and the elasticities of supply of the supplier
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
Price elasticity of demand = percentage change in quantity demanded / percentage change in price
If the absolute value of price elasticity is greater than one, it means demand is elastic. Elastic demand means that quantity demanded is sensitive to price changes.
Demand is inelastic if a small change in price has little or no effect on quantity demanded. The absolute value of elasticity would be less than one
Demand is unit elastic if a small change in price has an equal and proportionate effect on quantity demanded.
Elasticity of supply measures the responsiveness of supply to changes in price. Supply can be elastic, inelastic or unit elastic
if demand is elastic and supply is inelastic, the burden of tax would be borne by suppliers.
The party between the supplier and the consumer that has a more elastic demand would bear less tax incidence and the party that has a less elastic demand would bear more tax incidence
