If the supply of electricity in a city is relatively less elastic than the demand for electricity and electricity is taxed:
If the supply of electricity in a city is relatively less elastic than the demand for electricity and electricity is taxed:
buyers will pay more of the tax burden.
sellers and buyers will pay an equal share of the tax burden.
sellers will pay more of the tax burden.
buyers will pay all of the tax burden.
In the scenario where the supply of electricity is relatively less elastic than the demand for electricity, and a tax is imposed on electricity, the burden of the tax will be distributed between buyers and sellers.
Since the supply is less elastic, it means that sellers are less responsive to price changes compared to buyers. This typically results in sellers being able to pass a larger portion of the tax onto buyers in the form of higher prices.
Therefore, the correct answer is:
buyers will pay more of the tax burden.