When does the tax burden primarily fall on consumers in a market?

Prices, Wages & Taxes MCQs for PPSC, FPSC, NTS, and Pakistan government job tests. Select an option below, then read the explanation.

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Subject
Prices, Wages & Taxeseconomics-mcqs › prices-wages-taxes
Published
30 May 2019
Last updated
28 May 2026

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Explanation

The tax burden tends to fall more on buyers when the demand curve is inelastic (buyers are less sensitive to price changes) and the supply curve is elastic (producers can adjust quantity easily). In this case, consumers bear a larger share of the tax because they do not reduce their quantity demanded significantly despite higher prices.

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