Figure 6-17

-Refer to Figure 6-17. If the government places a $2 tax in the market, the seller bears $2 of the tax burden.

Question

Figure 6-17
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-Refer to Figure 6-17. If the government places a $2 tax in the market, the seller bears $2 of the tax burden.

Quizplus · Accepted Answer

The tax burden is shared between the seller and the buyer, depending on the elasticities of supply and demand. The $2 tax does not necessarily mean the seller bears the entire $2; the division of the tax burden depends on how the market adjusts to the tax.

Figure 6-17 ​

Figure 6-17