If a $10 sales tax is imposed on a good and the equilibrium price increases by $10,the tax is

Question

Quizplus · Accepted Answer

When the tax is imposed, the entire burden of the tax falls on the buyer as there is an increase in price. This is because with the increase in the price by $10, the sellers have adjusted their price by the same amount to cover the tax, without incurring any additional loss. Hence, the entire incidence of the tax has been shifted to the buyers, resulting in the price increase.

If a $10 Sales Tax Is Imposed on a Good