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Assume that the government increases the property tax on rental apartments. We can say that in...

Assume that the government increases the property tax on rental apartments. We can say that in the long run the incidence of taxation will fall on: a. the community at large. b. low income families. c.the landlords. d. the tenants. e. we do not have enough information to determine the incidence of taxation in this case.

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Answer #1

The right answer is option e. we do not have enough information to determine the incidence of taxation in this case.

Explanation: The incidence of a tax depends on the elasticity of demand and elasticity of supply. If demand is more inelastic than supply, the buyers (tenants) bear a larger burden of the tax and when demand is less inelastic than supply, the sellers (landlords) bear a larger burden of the tax. In this case, we do not know the elasticity of demand and supply.

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