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DragIT - Incidence of tax

In this interaction, drag the end of the demand curve up and down to see the impact of a change in the elasticity of demand on the tax revenue received by the government and the incidence of the tax on the firm and on the consumer. The tax revenue is the sum of the two areas - consumer share and firm share.

In this next interaction, drag the end of the supply curve up and down to see the impact of a change in the elasticity of supply on the tax revenue received by the government and the incidence of the tax on the firm and on the consumer. Again, the tax revenue is the sum of the two areas - firm and consumer.

question

1

Incidence of tax

The more elastic the demand curve the lower the consumers share of the tax will be.

a)
b)
Yes, that's correct. The statement is true. The more elastic the demand curve, the lower the proportion of the tax is paid by the consumer as the firms are unable to pass the tax on.No, that's not right. The statement is true. The more elastic the demand curve, the lower the proportion of the tax is paid by the consumer as the firms are unable to pass the tax on.Your answer has been saved.
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2

Incidence of tax

The more inelastic the supply curve the lower the producer share of the tax will be.

a)
b)
Yes, that's correct. The statement is false. The more inelastic the supply curve, the higher the proportion of the tax that is paid by the producer.No, that's not right. The statement is false. The more inelastic the supply curve, the higher the proportion of the tax that is paid by the producer.Your answer has been saved.
Check your answer

3

Incidence of tax

The more inelastic the demand curve the higher the producer share of the tax will be.

a)
b)
Yes, that's correct. The statement is false. The more inelastic the demand curve, the lower the proportion of the tax that is paid by the producer as the firms are able to pass the tax on.No, that's not right. The statement is false. The more inelastic the demand curve, the lower the proportion of the tax that is paid by the producer as the firms are able to pass the tax on.Your answer has been saved.
Check your answer