(Figure: Market for Pesticides) In the market for pesticides shown here, the original equilibrium price is $25. In an effort to reduce the usage of pesticides, a tax is then placed on the buyers in this market. Who bears the statutory burden of this tax?

Question

Quizplus · Accepted Answer

When a tax is placed on buyers, the demand curve shifts downward by the amount of the tax, resulting in a new equilibrium price that is lower than the original equilibrium price. This means that buyers are paying a higher price for pesticides, and therefore are bearing the statutory burden of the tax.

(Figure: Market for Pesticides) in the Market for Pesticides Shown