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

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 demanded does not change much when the price changes), then buyers will end up bearing most of the tax burden. This is because sellers can pass on the cost of the tax to buyers in the form of higher prices without significantly affecting the quantity demanded.

2. On the other hand, if the demand for a product is elastic (i.e., the quantity demanded changes a lot when the price changes), then sellers will bear most of the tax burden. This is because sellers cannot pass on the cost of the tax to buyers without significantly affecting the quantity demanded.

3. Similarly, the elasticity of supply also affects the tax incidence. If the supply is inelastic, sellers will bear most of the tax burden, and if the supply is elastic, buyers will bear most of the tax burden.

4. Therefore, even if a tax is physically paid by sellers, they will not always bear the full burden of the tax. The actual tax burden depends on the relative elasticities of demand and supply.