WAEC Economics 2011 Objective — Question 43

Question 43 of 50 from the West African Examinations Council (WAEC) Economics 2011 Objective paper, with the correct answer and a full explanation.

When the demand for a good is fairly inelastic, the burden of an indirect tax falls

A. A. more on the consumersCorrect
B. B. more on the sellers
C. C. on the consumers and sellers equally
D. D. completely on the capital

Explanation

The burden of indirect tax falls on both the sellers and/or the buyers depending on the elasticity of demand for the good on which the tax is levied. When demand is fairly inelastic, the consumer bears the greater proportion of the burden.

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