When an excise tax or sales tax is imposed on a product, the sellers are always able to shift the burden of the tax on to the buyers.

Question

Quizplus · Accepted Answer

The ability of sellers to shift the burden of a tax onto buyers depends on the relative elasticities of supply and demand. If demand is more elastic than supply, sellers bear a larger burden of the tax. Conversely, if supply is more elastic than demand, the burden shifts more to buyers.

When an Excise Tax or Sales Tax Is Imposed on a Product