Question

Under which of the following situations, the
incidence of a tax will be equally divided between
buyers and sellers?​

Answer 1

Explanation:

The tax incidence depends on the relative price elasticity of supply and demand. When supply is more elastic than demand, buyers bear most of the tax burden. When demand is more elastic than supply, producers bear most of the cost of the tax. Tax revenue is larger the more inelastic the demand and supply are.

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