Supply and demand theory shows us that the burden of a sales tax is shared equally by suppliers and demanders whether the tax is collected from the sellers or collected from the buyers.

Question

Quizplus · Accepted Answer

The burden of a sales tax is not shared equally by suppliers and demanders. It depends on the elasticity of demand and supply. If the demand is inelastic and supply is elastic, then the burden of the tax will fall more on the consumers. On the other hand, if the demand is elastic and supply is inelastic, the burden of the tax will fall more on the suppliers.

Supply and Demand Theory Shows Us That the Burden of a Sales