If the Demand Curve Is More Price Elastic Than the Supply

question 314

Essay

If the demand curve is more price elastic than the supply curve in a particular market, will the buyers or the sellers bear a larger burden of a per-unit tax imposed on the market?

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Definitions:

Diminishing Returns

Diminishing returns is an economic principle stating that after a certain point, additional units of input result in progressively smaller increases in output.

Average Fixed

The fixed costs of production divided by the quantity of output produced, indicating the average fixed cost per unit.

Marginal

Pertaining to the additional or incremental changes in costs, benefits, revenues, or other quantities, typically used in analysis of business decisions or economic policies.

Total Cost Curve

A graphical representation that shows the total cost of producing different quantities of output.