GCE Economics 2023 Objective — Question 8
Question 8 of 50 from the General Certificate of Education (GCE) Economics 2023 Objective paper, with the correct answer and a full explanation.
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When more of the tax on a product is borne by the buyer than the seller, the commodity involved has A. elastic demand B. fairly inelastic demand C. perfectly elastic demand D. perfectly inelastic demand
- A. elastic demand
- B. fairly inelastic demandCorrect
- C. perfectly elastic demand
- D. perfectly inelastic demand
Explanation
When demand is fairly inelastic, buyers bear more of a tax than sellers, because quantity demanded falls only slightly as price rises, so the price increase is largely passed on to consumers.
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