Incidence of an indirect tax

Question 1

What is the incidence of an indirect tax?

Answer 1

Incidence of an indirect tax- distribution of tax between consumers & producers

Question 2

What does the incidence of the tax (distribution of it) depend on?

Answer 2

Distribution depends on elasticity of both demand & supply

Question 3

How does the incidence of the tax (distribution of it) vary with the price elasticity of demand & supply?

Answer 3

When demand price elastic & supply price inelastic, burden of tax falls mostly on producers- firms ✖️ change prices or demand will suffer … ⬇️ profits

When demand price inelastic & supply elastic, burden of tax falls mostly on consumers- firms able to pass burden via ⬆️ prices- know demand for 🚘 ✖️ change

SHOULD MAKE SENSE BUT DRAW DIGRAM TO CONFIRM- DEFINITELY CORRECT