Consider the two markets: (i) market for milk vs (ii) market for luxury cars Suppose a sales tax is imposed on the two markets. In which market the sellers' share of tax burden is greater than the buyers' share? Explain. O Seller's share of tax burden is greater in the market for milk because demand for milk is elastic, meanwhile the demand for luxury cars is inelastic. O Seller's share of tax burden is greater in the market for milk because buyers will stop buying milk after a sales tax is after a II
Consider the two markets: (i) market for milk vs (ii) market for luxury cars Suppose a sales tax is imposed on the two markets. In which market the sellers' share of tax burden is greater than the buyers' share? Explain. O Seller's share of tax burden is greater in the market for milk because demand for milk is elastic, meanwhile the demand for luxury cars is inelastic. O Seller's share of tax burden is greater in the market for milk because buyers will stop buying milk after a sales tax is after a II
Principles Of Marketing
17th Edition
ISBN:9780134492513
Author:Kotler, Philip, Armstrong, Gary (gary M.)
Publisher:Kotler, Philip, Armstrong, Gary (gary M.)
Chapter1: Marketing: Creating Customer Value And Engagement
Section: Chapter Questions
Problem 1.1DQ
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Transcribed Image Text:Consider the two markets:
(i) market for milk vs (ii) market for luxury cars
Suppose a sales tax is imposed on the two markets. In which
market the sellers' share of tax burden is greater than the
buyers' share? Explain.
O Seller's share of tax burden is greater in the market for milk
because demand for milk is elastic, meanwhile the demand
for luxury cars is inelastic.
O Seller's share of tax burden is greater in the market for milk
because buyers will stop buying milk after a sales tax is
imposed. Meanwhile, buyers will still buy luxury cars after a
sales tax is imposed.
O Seller's share of tax burden is greater in the market for
luxury cars because demand for milk is inelastic, meanwhile
the demand for luxury cars is elastic.
O Seller's share of tax burden is greater in the market for milk
because in the market for milk, the producer surplus is
greater than the willingness to pay.
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