Solution Found!
Consider the market for rubber bands.a.If this market has
Chapter , Problem 3(choose chapter or problem)
Consider the market for rubber bands.a.If this market has very elastic supply and very inelastic demand, how would the burden of a tax on rubber bands be shared between consumers and producers? Use the tools of consumer surplus and producer surplus in your answer.b.If this market has very inelastic supply and very elastic demand, how would the burden of a tax on rubber bands be shared between consumers and producers? Contrast your answer with your answer to part (a).
Questions & Answers
QUESTION:
Consider the market for rubber bands.a.If this market has very elastic supply and very inelastic demand, how would the burden of a tax on rubber bands be shared between consumers and producers? Use the tools of consumer surplus and producer surplus in your answer.b.If this market has very inelastic supply and very elastic demand, how would the burden of a tax on rubber bands be shared between consumers and producers? Contrast your answer with your answer to part (a).
ANSWER:Step 1 of 4
Elastic demand refers to the nature of the demand created by the consumers upon a commodity which tends to fluctuate a lot in response to a very small percentage change in price. Inelastic supply refers to the nature of supply of any commodity created by the producers, which tends to change marginally due to a huge price change.