Tax incidence indicates 0 A, the actual division of the burden of a tax O B. the

Question

Tax incidence indicates 0 A, the actual division of the burden of a tax O B. the burden of a tax on consumers O C. who is legally required to send a tax payment to the government O D. the burden of a tax on producers. 0 E. who is not legally required to send a tax payment to the government. Do the people who are legally required to pay a tax always bear the burden of the tax? Briefly explain. O A. No. Producers always bear the burden of the tax. O B. Yes. Those who are legally required to send a tax payment to the government bear the burden of the tax O C. No. Those who are legaly required to send a tax payment to the govemment never bear the burden of the tax. O D. No. Consumers always bear the burden of the tax O E. No. Whoever bears the burden of the tax is not afected by who legally is required to pay the tax to the government.

Explanation / Answer

1) The answer is A -) the actual division of the burden of the tax.

because when the tax is imposed , its imposed on buyer and seller both. but the burden of tax fall on buyer or on seller depends on the price elasticity of supply and demand. Thus incidence of tax indicates the actual burden of tax .

2) The answer is D -) No . Whoever bear the burden of the tax is not affected by who legally is required to pay the tax to the government.

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