Suppose the pre-tax price of cigarettes is $3.00 per pack and the post-tax price is $4.00 per pack.The tax is $1.50 per pack and is paid by the retailers of cigarettes to the government.Six hundred packs were sold prior to the tax increase; 500 packs were sold after the tax.What is the statutory incidence of the tax on consumers?

Question

Quizplus · Accepted Answer

The statutory incidence of the tax on consumers is $0 because the tax is paid by the retailers to the government, not directly by the consumers.

Suppose the Pre-Tax Price of Cigarettes Is $3