If the government removes a $2 tax on buyers of cigars and imposes the same $2 tax on sellers of cigars,then the price paid by buyers will

Question

Quizplus · Accepted Answer

When the tax is shifted from buyers to sellers, the price to buyers will remain the same as before. However, sellers may choose to pass on the tax burden to buyers by raising their prices, but it's not necessary. Ultimately, the market will determine the price, and the tax burden will be shared between the buyers and sellers, depending on their bargaining power. Therefore, the price paid by buyers will not change, and the price received by sellers will not change at the onset.

If the Government Removes a $2 Tax on Buyers of Cigars