(Answered) Suppose the canadian government places an excise tax of $20Suppose the canadian government places…

➤ Why does elasticity matter for who bears the $20 excise tax?
Elasticity determines how much quantity adjusts when price changes. With a $20 excise tax, a steep (inelastic) curve means little quantity change, so taxed parties accept higher tax payments. A flat (elastic) curve leads to large quantity changes and bigger deadweight loss. Elasticities therefore set both burden distribution and efficiency loss from the tax.