Question

Suppose the demand for macaroni is inelastic, the supply of macaroni is elastic, the demand for cigarettes is inelastic, and the supply of cigarettes is elastic. If a tax were levied on the sellers of both of these commodities, we would expect that the burden of a. both taxes would fall more heavily on the buyers than on the sellers.b. the macaroni tax would fall more heavily on the sellers than on the buyers, and the burden of the cigarette tax would fall more heavily on the buyers than on the sellersc. the macaroni tax would fall more heavily on the buyers than on the sellers, and the burden of the cigarette tax would fall more heavily on the sellers than on the buyersd. both taxes would fall more heavily on the sellers than on the buyers.

Answer 1

Answer:

both taxes would fall more heavily on the buyers than on the sellers.

Explanation:

Burden of tax refers to the effect of tax on the distribution of welfare.

If demand is inelastic, it means that quantity demanded is not very sensitive to changes in price.

If demand is elastic, it means that quantity demanded is sensitive to changes in price.

From the question, the demand for macaroni and cigarettes are inelastic while their supply is elastic.

Therefore, the burden of tax would fall more heavily on the consumers because they are less sensitive to changes in price. If the price of cigarettes and macaroni increases, there is little change in the quantity demanded.

But if the burden of tax is passed on to suppliers, the quantity supplied would fall.

I hope my answer helps you