DBA 8-2 & 8-3 Jonathan Brown

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a)

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Suppliers pay more when supply is inelastic because they have few/no close
substitutes for the good while the consumers do. This makes the supplier pay more
because they cannot raise the price to the full tax since the consumers have more
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b)

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As the diagrams show the left change in price is smaller than the right meaning
suppliers pay more of the tax on the left than right because consumers have close
substitutes when demand is elastic and few/none when inelastic.
8-3)

With perfectly elastic supply this is a flat line which means the supplier will
produce any amount at pNT or higher, but will produce zero if the price=P'". If the
demand curve is perfectly inelastic than they demand a quantity and change in price
doesn't matter which means the tax burden is 100% on the consumers. If both supply
and demand are perfectly elastic then a tax imposed will produce zero of the good
because they both have perfect substitutes.