-The above figure shows the demand and cost curves facing a monopoly.If a $100 per unit tax is charged,what is the incidence of the tax on consumers?
A) 100%
B) 50%
C) 25%
D) 0%

Question

-The above figure shows the demand and cost curves facing a monopoly.If a $100 per unit tax is charged,what is the incidence of the tax on consumers?
A) 100% 
B) 50% 
C) 25% 
D) 0%

Quizplus · Accepted Answer

In a monopoly, the incidence of a tax is typically shared between the producer and the consumer. The exact distribution depends on the elasticity of demand and supply. In this case, the tax incidence on consumers is 50%, meaning consumers bear half of the tax burden.

-The Above Figure Shows the Demand and Cost Curves Facing