If a $5,000 tax is placed legally (statutorily) on the sellers of new automobiles and as a result the price of automobiles to consumers rises by $4,000, then the actual burden of the tax
A) falls completely on automobile buyers.
B) falls completely on automobile sellers.
C) is $4,000 on automobile buyers and $1,000 on sellers.
D) is $1,000 on automobile buyers and $4,000 on sellers.

Question

Quizplus · Accepted Answer

The price increase to consumers is $4,000, indicating that buyers bear $4,000 of the tax burden, while sellers bear the remaining $1,000.

If a $5,000 Tax Is Placed Legally (Statutorily) on the Sellers