When a tax is levied on a good or service,

Question

Quizplus · Accepted Answer

When a tax is levied on a good or service, buyers and sellers share the burden of the tax. The extent of the burden borne by each party depends on the elasticity of demand and supply. If demand is relatively inelastic, buyers bear a larger share of the tax burden, while if supply is relatively inelastic, sellers bear a larger share of the tax burden. However, in most cases, both buyers and sellers bear some of the tax burden.

When a Tax Is Levied on a Good or Service