Question

Tax incidence is the A. burden sellers have to absorb from a tax on goods and services. B. deadweight loss created by a tax. C. burden buyers have to absorb from a tax on goods and services. D. lost revenue the government endures from goods and services that are not taxed. E. division of the burden of a tax between the buyer and the seller.

Answer 1

Answer:

E. Division of the burden of a tax between the buyer and the seller

Explanation:

Tax incidence is an economic term for the division of a tax burden between buyers and sellers. Tax incidence is related to the price elasticity of supply and demand. When supply is more elastic than demand, the tax burden falls on the buyers. If demand is more elastic than supply, producers will bear the cost of the tax.