Suppose there is an upward-sloping supply curve and a downward-sloping demand curve for gasoline. If the government levies a tax of $1 on each gallon of gasoline that is sold
A) all of the tax will be borne by the seller
B) all of the tax will be borne by the buyer
C) the tax will be borne by both the seller and the buyer
D) the tax will be borne by neither the seller nor the buyer

Question

Quizplus · Accepted Answer

The tax burden is typically shared between the seller and the buyer in markets with upward-sloping supply curves and downward-sloping demand curves. The exact distribution depends on the elasticities of supply and demand.

Suppose There Is an Upward-Sloping Supply Curve and a Downward-Sloping