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(solution) Consider a tax on cigarettes made with tobacco. The tax incidence


Consider a tax on cigarettes made with tobacco. The tax incidence will fall more heavily on the supplier (tobacco farmers) or the consumers (cigarette smokers) depending on which side of the market is:

less elastic, which is likely to be the demand (consumer) side because of the addictive nature of the product.
more elastic, which is likely to be the demand (consumer) side because of the addictive nature of the product.
less elastic, which is likely to be the supply (seller) side because of the addictive nature of the product.

more elastic, which is likely to be the supply (seller) side because of the addictive nature of the product.

 


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Sep 13, 2020

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