If the Elasticity of Demand Is 2 in Absolute Value

question 37

Multiple Choice

If the elasticity of demand is 2 in absolute value, and the elasticity of supply is 1 in absolute value, how much of a tax burden will the buyer bear relative to the seller?

• A) The buyer will bear more of the tax burden than will the seller.
• B) The seller will bear more of the tax burden than will the buyer.
• C) The buyer and seller will share the tax burden equally.
• D) The buyer will not bear none of the tax burden since demand curve is twice as elastic as supply.