Question

42.) True or False? An excise tax imposed on the sellers of a good has exactly the same effects as one of equal size imposed on the buyers. (1 point)

43.) True or False? An excise tax imposed on the sellers of the good will raise the price paid by buyers, reduce the price received by sellers, and reduce the quantity bought and sold. (1 point)

44.) True or False? An excise tax creates a tax wedge between the price buyers pay and the price sellers receive. (1 point)

45.) True or False? The incidence of an excise tax depends on the elasticities of demand and supply for the good. (1 point)

Answer 1

(42) True

Effects of a tax does not depend on whether it's imposed on buyers or on sellers.

(43) True

A tax on sellers will lower effective price received by sellers, so they will lower supply. Supply curve will shift leftward, increasing price paid by buyers and decreasing quantity.

(44) True

The tax wedge is the vertical distance between original and shifted supply curves.

(45) True

When demand (supply) is more elastic, sellers (buyers) bear more tax burden, and when demand (supply) is more inelastic, buyers (sellers) bear more tax burden.