<p>No it should not. That would happen if demand is perfectly inelastic. But in your case the exam directly tells you neither supply or demand is perfectly inelastic. In that case the burden will be split between consumers and producers. The side of a market which is less elastic will end up with higher tax burden. So price will increase here but not by the amount of tax.</p>

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2022-11-29T20:49:49.747Z
2022-11-29T20:49:49.747Z
csilvia
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<p>Hello, I do not understand why option D is the correct answer, shouldn't the price paid by the consumers increase by the amount of the tax?</p>

<supply-and-demand><taxation>
regulation using taxes
Angels Vásquez
# regulation using taxes

(Asked by: username_0 on 2022-11-29)

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Hello, I do not understand why option D is the correct answer, shouldn't the price paid by the consumers increase by the amount of the tax?

**Tags:** supply-and-demand, taxation

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## 1 answers

### Answer by username_1 on 2022-11-29. Score: 1 | Accepted answer

No it should not. That would happen if demand is perfectly inelastic. But in your case the exam directly tells you neither supply or demand is perfectly inelastic. In that case the burden will be split between consumers and producers. The side of a market which is less elastic will end up with higher tax burden. So price will increase here but not by the amount of tax.


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