When the demand for a good is fairly inelastic, the burden of an indirect tax falls
-
more on the consumers of the goods
- more on the sellers of the goods
- on sellers and consumers equally
- completely on the capital
The correct answer is: 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.