Question

the incidence, or true burden of a tax: a. is not dependent on the economic actor upon which the tax is imposed. b. falls most heavily on the buyer if price elasticity of demand is higher. c. falls most heavily on the seller if price elasticity of demand is zero. d. is paid entirely by the seller if supply elasticity is infinite.

Answer 1

The incidence, or true burden, of a tax falls on both consumers and producers, and the division of the burden depends on the elasticity of demand and supply.

Step-by-step explanation:

The subject of this question is Economics. In economics, the analysis of how a tax burden is divided between consumers and producers is called tax incidence. The burden of a tax falls on both consumers and producers, but the division of the burden depends on the elasticity of demand and supply.

If the demand for a good is more inelastic than the supply, consumers will bear most of the tax burden. On the other hand, if the supply of a good is more inelastic than the demand, sellers will bear most of the tax burden.

For example, in the case of cigarette taxes, the demand for cigarettes is typically inelastic, meaning that consumers are less responsive to price changes. Therefore, the tax burden falls on consumers in the form of higher prices.