If a tax is placed on the producers of good Y, the consumers of good Y will end up paying the greatest amount of the tax if the elasticity of demand for good Y is
Elastic.
Inelastic.
Unit elastic.
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Sra
elastic
To determine which group will bear the greatest burden of a tax, we need to consider the price elasticities of demand and supply for the good in question. The price elasticity of demand measures how responsive consumers are to changes in price.
If the demand for good Y is elastic, it means that consumers are highly responsive to changes in price. In this case, when a tax is placed on the producers of good Y, the increase in price due to the tax will cause a relatively larger decrease in quantity demanded. As a result, consumers will end up paying the greatest amount of the tax burden.
On the other hand, if the demand for good Y is inelastic, it means that consumers are not highly responsive to changes in price. When a tax is imposed, the increase in price due to the tax will cause a relatively smaller decrease in quantity demanded. As a result, producers will end up paying a greater portion of the tax burden.
Finally, if the demand for good Y has unit elasticity, it means that the percentage change in price is matched by an equal percentage change in quantity demanded. In this case, the burden of the tax is shared equally between the producers and consumers.
Therefore, the consumers of good Y will end up paying the greatest amount of the tax if the elasticity of demand for good Y is elastic.