Respuesta :
If an excise tax is imposed on goods when price elasticity of demand is relatively elastic and the the price elasticity of supply is relatively inelastic in a specific market, The producers will bear the greater burden.
In the scenario specified in the question, price elasticity of demand is relatively elastic and the price elasticity of supply is relatively inelastic. This means that the consumers are relatively more price sensitive compared to the suppliers in the market. Hence, consumers will be more reactive to any change in price of the good than the sellers in the market. if an excise tax is imposed especially on the consumers, the effect will be more on the producers because supply is inelastic and consumers can determine demand due to its elasticity.
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