WAEC SSCE - Economics - 1996 (Objective)

Question 1 Report

Who bears the greater burden of the indirect tax when the demand for a commodity is inelastic? The

wholesaler

shareholders

retailer

consumers

entreprenuer

Answer Details

When the demand for a commodity is inelastic, it means that consumers are not very responsive to changes in price and will continue to purchase the commodity even if the price increases. In this situation, the burden of an indirect tax falls more heavily on the consumers because they are willing to pay the higher price and cannot easily reduce their consumption. Therefore, the correct answer is "consumers".

Read lesson note on Theory Of Price Determination (WAEC)

Read lesson note on The Theory Of Demand (JAMB)






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