Which of the following is correct concerning the burden of a tax imposed on coffee mugs?
A) Buyers and sellers share the burden of the tax.
B) Buyers bear the entire burden of the tax.
C) Sellers bear the entire burden of the tax.
D) It depends on whether the buyers or the sellers are required to pay the tax.

Question

Quizplus · Accepted Answer

When a tax is imposed on coffee mugs, both buyers and sellers share the burden of the tax. Buyers will have to pay a higher price for the coffee mugs due to the tax, while sellers will receive a lower price due to the tax. The extent of the burden on each party depends on the price elasticity of demand and supply, respectively. In general, the burden of the tax will be shared between buyers and sellers, but not equally.

Which of the Following Is Correct Concerning the Burden of a Tax