Social Sciences and History / Unit 13 SSH 1223 short lesson, about 20 seconds
Tax Incidence Follows Inelasticity
Captions available
The idea
Tax incidence is how a tax's burden divides between buyers and sellers. When supply is more elastic than demand, buyers bear most of the burden; when demand is more elastic than supply, producers bear most. Revenue is larger the more inelastic both are.
In practice
A cigarette tax landing mostly on smokers.
Where people slip
Who writes the check does not decide.
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