The tax incidence on sellers is higher if ________.

Question

Quizplus · Accepted Answer

If buyers are more sensitive to price changes than sellers, then sellers will bear a higher tax incidence as they will need to lower their prices to attract buyers, resulting in a decrease in their revenue. If the buyers and sellers are equally sensitive to price changes or if sellers are more sensitive than buyers, the tax incidence will not necessarily be higher on the sellers. The number of buyers in a market is not directly related to the tax incidence on sellers.

The Tax Incidence on Sellers Is Higher If ________