When the demand for a good is fairly inelastic, the burden of an indirect tax falls
A. more on the consumers of the goods B. more on the sellers of the goods C. on sellers and consumers equally D. completely on the capital
Correct Answer: A
Explanation
Relatively or fairly inelastic demand is one where the percentage change in demand is less than the percentage change in the price of a product. This means, a change in price will lead to a lesser change in the quantity demanded. An indirect tax is a tax levied on goods and services. The consumer will bear the extra cost of such goods, because a rise in its price will lead to a lesser change in the quantity the consumers are willing to buy.
