Tax incidence depends on:

Question

Quizplus · Accepted Answer

Tax incidence refers to the distribution of tax burden between buyers and sellers. It depends on the price elasticities of demand and supply because if demand or supply is highly elastic, then the burden of the tax will fall largely on the other party (i.e. if demand is highly elastic, then the burden will fall largely on producers; if supply is highly elastic, then the burden will fall largely on consumers). The nature of the tax and income elasticity of demand can also have an impact on tax incidence, but they are not as significant as price elasticities of demand and supply. Cross-price elasticity of supply is not relevant to tax incidence.

Tax Incidence Depends On