If a tax is physically paid by sellers, then sellers will always bear the full burden of the tax

Question

If a tax is physically paid by sellers, then sellers will always bear the full burden of the tax
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Solution 1

The statement is not necessarily true. The burden of a tax, also known as tax incidence, does not depend on who physically pays the tax, but on the price elasticity of demand and supply.

Here are the steps to understand this:

  1. If the demand for a product is inelastic (i.e., the quantity demande Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study prob
Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study problem.
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