The wedge between the buyers' price and the sellers' price is the same, regardless of whether the tax is levied on buyers or sellers.

Question

Quizplus · Accepted Answer

The economic incidence of a tax (how the burden of the tax is divided between buyers and sellers) does not depend on whether the tax is levied on buyers or sellers. The market adjusts so that the price differences and the tax burdens are the same in both cases.

The Wedge Between the Buyers' Price and the Sellers' Price