When a unit tax is placed on demanders ____.
A)it will be paid entirely by demanders if the demand curve is elastic
B)it will have the same effect as a similar unit tax placed on suppliers
C)they will pay a larger share than if it was initially placed on suppliers
D)they will pay a smaller share than if it was initially placed on suppliers

Question

Quizplus · Accepted Answer

The incidence of a tax, meaning who actually bears the cost of the tax, does not depend on whether the tax is levied on demanders or suppliers. The distribution of the tax burden between consumers and producers is determined by the relative elasticities of demand and supply, not by who the tax is initially levied on.

When a Unit Tax Is Placed on Demanders ____