Suppliers of a commodity are better off whenever the legal incidence of a tax is shifted away from the suppliers to the demanders.

Question

Quizplus · Accepted Answer

The economic incidence (who actually bears the burden) of a tax does not depend on the legal incidence (who is legally responsible for paying the tax). The distribution of the tax burden between suppliers and demanders is determined by the relative elasticities of supply and demand, not by who is legally assigned to pay the tax.

Suppliers of a Commodity Are Better Off Whenever the Legal