I would appreciate some thoughts from the list on a question that an A2
student asked me today.
If it is true that:
1) All straight line supply curves that pass through the horizontal
(quantity) axis are inelasic irrespective of the angle of ascent, and all
straight line supply curves that pass through the price (vertical) axis are
elastic.
2) If the incidence of taxation is partly dependant on the elasiticity of
supply, ie the more inelastic is the supply the greater will be the
incidence of taxation on the supplier for any given demand curve and vice
versa.
Then how come it is possible to draw a very flat striaght line supply curve
through the quantity axis (inelastic) and a very steep supply curve through
the price axis (elastic) and the incidence of tacation on the supplier will
be greater on the elastic supply curve than the inelastic supply curve
contrary to economic thoery?
Any answers gratefully accepted.
John Eveson
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