Homework Help-Economics?

Question

Can someone please help me w this economics question??

In the 90's, Congress passed a bill to impose a tax on luxury items such as yacht. Using an argument which involves the relative elasticity of supply and demand, explain who bears the burden of the tax?

Answer 1

the buyer

Answer 2

The consumer.

You must ask the question who buys luxury items such as yachts?

If you say wealthy consumers then you are correct.  With that being said, if they have to pay a little extra on taxes to acquire a yacht  they will do so.  Demand for yachts is not going to drop because you have to pay a few extra dollars in taxes.  If you can afford the yacht then you can afford the tax.