(Figure: Tax on Seller) In the graph shown, the original equilibrium price is $50. A $6 tax is placed on the seller in this market. Who bears the statutory burden of this tax?
A)the seller
B)the buyer
C)the government
D)the people who make the law on taxes

Question

(Figure: Tax on Seller) In the graph shown, the original equilibrium price is $50. A $6 tax is placed on the seller in this market. Who bears the statutory burden of this tax? 
A)the seller 
B)the buyer 
C)the government 
D)the people who make the law on taxes

Quizplus · Accepted Answer

When a tax is imposed on the seller, the supply curve shifts upward by the amount of the tax (in this case, $6) causing the equilibrium price to increase from $50 to $56. The buyer now pays a higher price ($56) while the seller receives a lower price ($50 - the original equilibrium price). Therefore, the seller bears the statutory burden of the tax.

(Figure: Tax on Seller) in the Graph Shown, the Original