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Figure: Tax Incidence
-(Figure: Tax Incidence) Look at the figure Tax Incidence. All other things unchanged, the effect of an excise tax on gasoline in the long run is most likely illustrated by panel _____, and the greater share of the burden of the excise tax (shown by the tax wedge in each panel) is borne by _____.

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Use the following to answer questions:
Figure: Tax Incidence 
-(Figure: Tax Incidence) Look at the figure Tax Incidence. All other things unchanged, the effect of an excise tax on gasoline in the long run is most likely illustrated by panel _____, and the greater share of the burden of the excise tax (shown by the tax wedge in each panel) is borne by _____.

Quizplus · Accepted Answer

The correct answer is A because in the long run, the supply curve will shift to the left, causing the price to increase and the quantity to decrease. The buyers will bear the greater share of the burden of the excise tax.

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