Consider the following statements :
- 1. Burden of a tax on a commodity is independent of who (buyer or seller) it is explicitly imposed upon
- 2. Burden of a tax on a commodity depends on the slope of the demand and supply curves
1 only
2 only
Both 1 and 2
Neither 1 nor 2
Answer is Right!
Answer is Wrong!
This question was previously asked in
UPSC CAPF – 2024
Statement 2 is correct: The slope of the demand and supply curves reflects their elasticity. Steeper curves indicate lower elasticity, while flatter curves indicate higher elasticity. When demand is less elastic than supply, the buyer bears more of the tax burden. When supply is less elastic than demand, the seller bears more of the burden. Thus, the burden depends on the slopes (and therefore elasticities) of the curves.
Since both statements are correct, option C is the correct answer.