Imagine that the state legislature raises the tax on gasoline by 10 cents/gallon. What most likely happens next?

Question

Quizplus · Accepted Answer

Service station operators are likely to pass some of the tax cost on to consumers, but not the entire 10 cent increase. This is because they still need to remain competitive with other gas stations in the area, so they may only pass along a portion of the tax increase, perhaps around 6 cents/gallon.

Imagine That the State Legislature Raises the Tax on Gasoline