Unless demand is perfectly elastic or perfectly inelastic, whether a tax is levied on buyers or on sellers, the cost is shared.
The given statement is True, reason: When demand is perfectly inelastic, buyers pay 100% of the tax. relative elasticity of the supply and demand curves.
Perfectly elastic, elastic, perfectly inelastic, inelastic, and unitary are the five major categories into which elasticities can be effectively categorized. If the elasticity is larger than one, it indicates that the demand or supply is very responsive to changes in price. A demand or supply that is inelastic is one whose elasticity is less than one, showing a low responsiveness to changes in price. The proportionate responsiveness of either supply or demand is shown by unitary elasticities.
The two elasticity extremes are referred to as fully elastic and perfectly inelastic. A change in price causes the amount to decrease to zero, which is referred to as being perfectly elastic. When the quantity is completely inelastic, there is no change in it at all when the price changes.
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