If a tax is imposed on the buyer of a product, the tax incidence will fall entirely on the buyer.

Question

Quizplus · Accepted Answer

The tax incidence may be shared by both the buyer and the seller, depending on the elasticity of supply and demand for the product. If demand is very high and supply is very low, the seller may be able to shift the entire burden of the tax onto the buyer by raising the price, but in most cases the burden will be shared between the two parties.

If a Tax Is Imposed on the Buyer of a Product