Figure 18-1
-The economic burden of an excise tax
A)can usually be partially shifted from buyers onto sellers.
B)equals the revenue from the tax.
C)is less than the burden of an income tax that would raise the same revenue.
D)is shared equally by buyers and sellers.

Question

Figure 18-1 
-The economic burden of an excise tax
A)can usually be partially shifted from buyers onto sellers. 
B)equals the revenue from the tax. 
C)is less than the burden of an income tax that would raise the same revenue. 
D)is shared equally by buyers and sellers.

Quizplus · Accepted Answer

An excise tax on a good or service typically results in higher prices for buyers, but sellers may be able to partially shift the burden of the tax onto buyers by raising prices. Therefore, the economic burden of the tax is partly borne by buyers and partly borne by sellers, and is not shared equally. The burden of an excise tax is not necessarily equal to the revenue generated by the tax, as it depends on how elastic the supply and demand for the taxed good or service are. Additionally, the comparison to the burden of an income tax is not relevant in this context.

Figure 18-1 -The Economic Burden of an Excise Tax