Which of the following statements is TRUE?
I. A $0.50 tax on each fishing lure sold raises the price per lure by $0.50.
II. A tax on sellers is equivalent to a tax on buyers.
III. A tax on buyers is analyzed by shifting the demand curve up by the amount of the tax.
A) I and II only
B) II and III only
C) II only
D) I, II, and III

Question

Quizplus · Accepted Answer

Statement II is true, according to the incidence of tax principle, but statement I is not necessarily true as the incidence of tax may vary. Statement III is false as a tax on buyers results in shifting the demand curve downwards, not upwards.

Which of the Following Statements Is TRUE