When a unit tax is placed on suppliers _____.
A)it will have the same effect as a twice as large excise tax placed on demanders
B)it will have the same effect as a similar unit tax placed on demanders
C)they will be able to shift the entire tax onto their resource suppliers
D)they will be able to force demanders to pay the tax to the government

Question

Quizplus · Accepted Answer

When a unit tax is placed on suppliers, it will have the same effect as a similar unit tax placed on demanders. This is because the tax burden ultimately falls on both the suppliers and demanders, resulting in a shift in the supply curve upwards by the amount of the tax. As a result, the equilibrium price will increase, and the quantity exchanged will decrease. The incidence of the tax will depend on the elasticity of demand and supply, and in the case of a unit tax, the incidence is divided equally between the demanders and suppliers.

When a Unit Tax Is Placed on Suppliers _____