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WAEC Economics 1988 Question 35

Question 35

Public Finance

When the demand for a commodity is inelastic, who bears greater burden of the indirect tax?

  1. A.The producer
  2. B.The government
  3. C.The retailer
  4. D.The consumer
  5. E.The wholesaler
Show the answer and explanation

Answer: D (The consumer)

Explanation

With inelastic demand buyers keep buying at a higher price, so most of the tax can be passed on to the consumer.