Tax incidence refers to the division of the tax burden between the buyer and seller, or between different groups in the economy. It is not related to the dollar amount of the tax, the revenue collected, or the deadweight loss. It may be expressed as a percentage or dollar amount per unit, but these are not definitive characteristics of tax incidence.

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Tax Incidence Is the

Question 5

Multiple Choice

Tax incidence is the

A) dollar amount of a tax, expressed as a percentage of the purchase price.
B) dollar amount of a tax per unit sold.
C) division of a tax burden between the buyer and seller.
D) amount of revenue collected by government on a specific good.
E) deadweight loss from the tax.

Correct Answer: