Why does it NOT matter whether a tax is levied on the buyer or seller of the good
A)because sellers always bear the full burden of the tax
B)because buyers always bear the full burden of the tax
C)because buyers and sellers always share the burden of the tax
D)because government always bears the full burden of the tax

Question

Quizplus · Accepted Answer

The incidence of a tax, or who bears the burden of the tax, depends on the elasticity of supply and demand for the good. In reality, both buyers and sellers may bear some portion of the tax burden, and this distribution can vary based on market conditions. Therefore, it does not necessarily matter whether the tax is levied on the buyer or seller, as the ultimate incidence of the tax is determined by the market forces of supply and demand.

Why Does It NOT Matter Whether a Tax Is Levied