Which of the following is an accurate statement about tax incidence?

Question

Quizplus · Accepted Answer

Tax incidence refers to the distribution of the tax burden between buyers and sellers. The incidence of a sales tax depends on the price sensitivity, or elasticity, of demand and supply for the taxed commodity. If the demand is relatively inelastic, buyers will bear most of the tax burden. If the supply is relatively inelastic, sellers will bear most of the tax burden. Therefore, the incidence of a sales tax is not fixed or clear-cut, but depends on the specific economic conditions of the market in question. Choices A, B, C, and E are inaccurate statements about tax incidence.

Which of the Following Is an Accurate Statement About Tax