Final answer:
An increase in income tax rates to finance benefits for seniors would likely lead to a decrease in demand for some commodities due to reduced disposable income, affecting the equilibrium price and quantity.
Step-by-step explanation:
If the government increased income tax rates to finance more generous benefits for seniors, according to demand and supply model predictions, this would likely result in a decrease in demand for some commodities. The increase in taxes means that consumers will have less disposable income to spend, reducing their ability to purchase goods and services. This decrease in demand would lead to a lower equilibrium price and quantity for the affected commodities.
When considering the impact of taxes on markets with different elasticities, if the market supply is inelastic, such as beachfront hotels, the introduction of a tax does not greatly affect the equilibrium quantity, and the tax burden is passed on to the sellers. However, if the supply was elastic, sellers could reorganize their businesses to avoid supplying the taxed good, and the tax would result in a much lower quantity sold. This demonstrates the relationship between the tax incidence and the elasticity of demand and supply.