Which of the following statements is correct?

Question

Quizplus · Accepted Answer

The statement that 'Who actually pays a tax depends on the price elasticities of supply and demand' is correct. The tax burden can be partially shifted to either the buyer or the seller depending on the relative price elasticities of supply and demand. This means that the party with less elastic demand or supply is likely to bear more of the tax burden. The other statements are incorrect- A is incorrect as some portion of the tax burden can be shifted to sellers, C is incorrect as the market and its conditions determine who bears the tax burden, and D is incorrect as the tax burden cannot always be passed on completely to buyers.

Which of the Following Statements Is Correct