Use the figure below to answer the following question(s).
Figure 4-7

-Refer to Figure 4-7.The supply curve S₁ and the demand curve D indicate initial conditions in the market for gasoline.A $.60-per-gallon excise tax on gasoline is levied,which shifts the supply curve from S₁ to S₂.Which of the following states the actual burden of the tax?
A)$.50 for buyers and $.10 for sellers
B)$.50 for sellers and $.10 for buyers
C)The entire $.60 falls on sellers.
D)The entire $.60 falls on buyers.

Question

Use the figure below to answer the following question(s).
Figure 4-7
 
-Refer to Figure 4-7.The supply curve S₁ and the demand curve D indicate initial conditions in the market for gasoline.A $.60-per-gallon excise tax on gasoline is levied,which shifts the supply curve from S₁ to S₂.Which of the following states the actual burden of the tax?
A)$.50 for buyers and $.10 for sellers 
B)$.50 for sellers and $.10 for buyers 
C)The entire $.60 falls on sellers. 
D)The entire $.60 falls on buyers.

Quizplus · Accepted Answer

The burden of a tax is shared between buyers and sellers depending on the elasticity of demand and supply. In this case, buyers bear $.50 and sellers bear $.10 of the tax burden.

Use the Figure Below to Answer the Following Question(s)