How is a tax on lemonade divided when it is placed on the sellers of lemonade

Question

Quizplus · Accepted Answer

In most cases, when a tax is placed on the sellers of a good or service, the burden of the tax is shared between the buyers and sellers. The sellers may increase the price of the lemonade to cover the cost of the tax, which shifts some of the burden onto the buyers. However, the buyers may also choose to buy less lemonade at the higher price, which places some of the burden back onto the sellers. The actual division of the burden will depend on the specific circumstances of the market.

How Is a Tax on Lemonade Divided When It Is