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Tax Incidence in Perfectly Competitive Industry

When a unit tax is levied on a competitive industry then in the short run: which of the following statements is true

a) The burden of tax on consumers will be greater when demand’s price elasticity is higher

.(b) The burden of tax on both consumers and producers will be unaffected by price elasticity of demand

.(c) The burden of tax on producers will be greater when demand’s price elasticity is lower

.(d) The burden of tax on consumers will be greater when demand’s price elasticity is lower.

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I think its C ? anyone else agree ?
Reply 1
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jon2016
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Wait I think it might be D, as the generally the party that is more inelastic pays the greater share of taxation
Inelastic PED or elastic PES: most of the tax is paid by consumers
Elastic PED or inelastic PES: most of the tax is paid by producers
Reply 3
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jon2016
OP
9
Original post by keynes24
Inelastic PED or elastic PES: most of the tax is paid by consumers
Elastic PED or inelastic PES: most of the tax is paid by producers


I get that I was just thrown off by the ridle like nature of the question

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