Who bears the burden of a tax imposed on lawn fertilizer
A)Buyers bear the entire burden of the tax.
B)Sellers bear the entire burden of the tax.
C)Buyers and sellers share the burden of the tax.
D)The government bears the entire burden of the tax.

Question

Quizplus · Accepted Answer

Whenever a tax is imposed on a good, the burden of the tax is shared between the buyers and sellers in the market. In the case of lawn fertilizer, if the tax is imposed on sellers, they may choose to pass on the tax burden to buyers by raising the price of the product. Alternatively, if the tax is imposed on buyers, they may be willing to pay more for the product, but the sellers may still choose to raise the price of the product to capture some of the tax revenue. Therefore, both buyers and sellers will share the burden of the tax.

Who Bears the Burden of a Tax Imposed on Lawn