An excise tax on consumers:
A)generates less tax revenue than taxing producers.
B)has exactly the same effect as taxing producers.
C)generates more tax revenue than taxing producers.
D)causes the supply curve to shift up and to the left.

Question

Quizplus · Accepted Answer

In economic theory, whether an excise tax is levied on consumers or producers, the effect on the market outcome is the same. The tax burden will be distributed between consumers and producers depending on the elasticities of supply and demand, but the overall tax revenue and distortions in the market are identical regardless of who officially pays the tax.

An Excise Tax on Consumers