If a $500 tax is placed legally (statutorily) on the buyers of new couches and as a result the price of couches at stores rises by $200, the actual burden of the tax
A) falls completely on couch buyers.
B) falls completely on couch sellers.
C) is $200 on couch buyers and $300 on sellers.
D) is $300 on couch buyers and $200 on sellers.

Question

Quizplus · Accepted Answer

The price increase of $200 indicates that buyers bear $200 of the tax burden, while sellers bear the remaining $300, since the total tax is $500.

If a $500 Tax Is Placed Legally (Statutorily) on the Buyers