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Question

In case of a particular good, it is noted that the buyers bear a larger part of the tax burden. The demand for the good is likely to be .
  1. elastic
  2. inelastic
  3. perfectly elastic


Solution

The correct option is A elastic
Since the tax burden is more on the buyers, it means that the demand for the good is less elastic than supply. Hence, the demand is likely to be inelastic.

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