Essentials of Economics 7th Edition by Gregory Mankiw

Exercise 2

Consider the market for rubber bands.
a. If this market has very elastic supply and very inelastic demand, how would the bur-den of a tax on rubber bands be shared between consumers and producers? Use the tools of consumer surplus and producer sur-plus in your answer.
b. If this market has very inelastic supply and very elastic demand, how would the burden of a tax on rubber bands be shared between consumers and producers? Contrast your answer with your answer to part (a).