Currently, federal and state gasoline taxes (imposed statutorily on the sellers of gasoline) amount to about $.45 per gallon. Suppose the current price of gasoline is $1.20 per gallon, and that if the tax was not in place, the price would be only $.80.
A) The full incidence of the tax is falling on consumers.
B) The full incidence of the tax is falling on suppliers.
C) A $.05 burden is being borne by sellers and $.40 by consumers.
D) A $.05 burden is being borne by consumers and $.40 by sellers.

Question

Quizplus · Accepted Answer

The price without tax is $0.80, and with tax, it is $1.20. The tax is $0.45, so consumers pay $0.40 more, and sellers receive $0.05 less.

Currently, Federal and State Gasoline Taxes (Imposed Statutorily on the Sellers