Question

The demand for cable television is relatively elastic, because if the price gets too high, people will rent dvds or videos instead of watching cable. who is likely to bear the incidence of a 10 percent tax on cable television?

Answer 1

Answer:

The supplier of the cable television service

Explanation:

When the demand for a product or service is elastic, a price increase will decrease the quantity demanded in a larger proportion than the price increase. Therefore, the 10% tax on cable TV will decrease the quantity demanded by more than 10%.

When the demand is inelastic, the opposite happens, consumers bear the incidence of any tax or price increase.

Answer 2

The answer is the producer