A tax is imposed on the sale of a product. As long as neither the supply nor the demand is perfectly elastic or inelastic,

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Quizplus · Accepted Answer

When a tax is imposed on the sale of a product, the burden of the tax is shared between consumers and producers, depending on the elasticities of supply and demand. This means the price paid by consumers typically increases by less than the amount of the tax, as the rest of the tax burden is absorbed by the producers in the form of a lower net price received.

A Tax Is Imposed on the Sale of a Product