Which of the following is correct concerning the burden of a taximposed on coffee mugs?
A)Buyers and sellers share the burden of the tax.(True Answer )Correct
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 a good like coffee mugs, the price that buyers pay for the mugs increases, making them less willing to buy as much as they did before. At the same time, the increase in price may lead sellers to produce fewer mugs than before. As a result of these factors, both buyers and sellers end up sharing the burden of the tax, with the exact amount each party pays depending on various factors such as the relative price elasticity of demand and supply.

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