Which of the following statements is true?

Question

Quizplus · Accepted Answer

The statement "Who actually pays a tax depends on the price elasticities of supply and demand" is true according to the principle of tax incidence. The incidence of a tax refers to who ultimately bears the burden of the tax, which is dependent on the relative price elasticity of demand and supply. So, both buyers and sellers can end up sharing the burden of the tax depending on the price elasticity of demand and supply. The other statements are not necessarily true; for example, a tax levied on sellers may not always be passed on completely to buyers.

Which of the Following Statements Is True