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WAEC Economics 2023 Question 8

Question 8

Public Finance

When more of the tax on a product is borne by the buyer than the seller, the commodity involved has

  1. A.elastic demand.
  2. B.fairly inelastic demand.
  3. C.perfectly elastic demand.
  4. D.perfectly inelastic demand.
Show the answer and explanation

Answer: B (fairly inelastic demand.)

Explanation

Buyers who keep buying despite the higher price carry most of the tax, which happens when demand is fairly inelastic.