(Figure: Market for Timber) Refer to the figure which shows the market for timber. Which of the following statements is correct?
A)There is no statutory burden for this tax.
B)The economic burden of this tax is greater on the buyer.
C)The economic burden of this tax is being split equally between buyer and seller.
D)The economic burden of this tax is greater on the seller.

Question

(Figure: Market for Timber) Refer to the figure which shows the market for timber. Which of the following statements is correct? 
A)There is no statutory burden for this tax. 
B)The economic burden of this tax is greater on the buyer. 
C)The economic burden of this tax is being split equally between buyer and seller. 
D)The economic burden of this tax is greater on the seller.

Quizplus · Accepted Answer

The tax shifts the supply curve to the left, causing the equilibrium price to increase for buyers and decrease for sellers. This means that the economic burden of the tax falls mainly on the seller, as they are receiving a lower price for each unit of timber sold. Therefore, choice D is correct.

(Figure: Market for Timber) Refer to the Figure Which Shows