Asked by Jasmine Nacole on Jun 19, 2024
Verified
Refer to Figure 6-17. If the government places a $2 tax in the market, the seller bears $2 of the tax burden.
Seller Bears
Refers to situations where the seller is responsible for costs or burdens, such as during the transaction of goods where the seller pays for shipping or returns.
- Understand the theory of tax incidence and the partitioning of tax dues between consumers and merchants.
- Assess the repercussions of taxation on market consequences, focusing on the prices buyers pay and the revenue sellers obtain.
Verified Answer
CP
Casandra PahedJun 25, 2024
Final Answer :
False
Explanation :
The tax burden is shared between the seller and the buyer, depending on the elasticities of supply and demand. The $2 tax does not necessarily mean the seller bears the entire $2; the division of the tax burden depends on how the market adjusts to the tax.
Learning Objectives
- Understand the theory of tax incidence and the partitioning of tax dues between consumers and merchants.
- Assess the repercussions of taxation on market consequences, focusing on the prices buyers pay and the revenue sellers obtain.