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If the Elasticity of Demand Is 1 in Absolute Value

Question 33

Multiple Choice

If the elasticity of demand is 1 in absolute value, and theelasticity of supply is 1 in absolute value, how much of a taxburden will the buyer bear relative to the seller?


A) The buyer will bear more of the tax burden than will the seller.
B) The seller will bear more of the tax burden than will the buyer.
C) The buyer and seller will share the tax burden equally.(True Answer ) Correct
D) The buyer will not bear any of the tax burden since demand is unit elastic.

Correct Answer:

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