How is the incidence of a sales tax between the buyer and the seller determined?
What will be an ideal response?
The tax incidence depends on the price elasticities of supply and demand. Buyers pay more of the tax the more inelastic the demand and the more elastic the supply. Sellers pay more of the tax the more elastic the demand and the more inelastic the supply.
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The short-run simulative effect of a government budget deficit on real GDP is stronger with ________ financing, since this ________ the crowding out effect of the deficit
A) bond, enhances B) bond, eliminates C) money, enhances D) money, eliminates
If the Fed were to change the reserve requirement in an effort to increase the money supply, they would:
A. increase the reserve requirement. B. decrease the reserve requirement. C. open the discount window longer. D. increase the discount rate.
In a recession, demand for cars falls, and the demand curve in the market for cars
A. shifts to the right. B. shifts to the left. C. remains unchanged. D. slows down.
According to the law of supply:
A. producers are willing to supply larger amounts of a good as its price increases. B. a direct relationship exists between the price of a good and the amount buyers choose to buy. C. an inverse relationship exists between the price of a good and the amount buyers wish to buy. D. an inverse relationship exists between the price of a good and the amount producers supply.