Economics · Public Finance
Given below are two statements regarding tax incidence: Statement I: If a consumer buys a product that becomes subject to a tax, the consumer is in a better position to avoid the tax (and the seller bears a larger share) if the consumer's demand is elastic while the seller's supply is inelastic. Statement II: A tax on an inelastic commodity like salt is likely to be borne almost entirely by the consumer. In the light of the above statements, choose the most appropriate answer:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Statement I is incorrect but Statement II is correct
- 2Statement I is correct but Statement II is incorrect
- 3Both Statement I and Statement II are incorrect
- 4Both Statement I and Statement II are correct✓
Correct answer
Both Statement I and Statement II are correct
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