Question

What is the incidence of a tax?

Question 3 options:

The sum of a tax and a product’s price


The final burden of a tax


The levying of a tax on consumers


The ratio of a tax to a product’s price

Answer 1

The correct answer is option The final burden of a tax .

Step-by-step explanation:

The incidence of a tax studies to whom and how the final burden of a tax will be applied.

Most people pay some form of initial tax, but that does not mean they will be affected by the final burden of a tax.

Sometimes taxes can be transferred, ranging from a small taxpayer to large companies. The incidence is who is responsible for understanding the division of taxes between each of these parties.

Given this information the correct answer is option B.

Answer 2

The final burden of tax is said to be incidence of tax.

Answer: Option B

Explanation:

The incidence of tax is a monetary term of division of the taxation rate between the purchaser and merchants. It is identified with the value flexibility of the interest and supply. It is a circulation of assessment and commitments, which must be secured by the purchasers and dealers.

For example when the inventory is more than request, the taxation rate falls on the purchaser and when the interest is more than supply, the taxation rate falls on the merchant.