CH 5 Tax incidence Flashcards
1
Q
Tax incidence depends on what?
A
On price elasticities of demand and supply
2
Q
When demand is inelastic who pays more tax?
A
Consumers
3
Q
When demand is elastic who pays more tax?
A
Producers
4
Q
When the supply is more elastic than demand, the tax burden falls on?
A
Consumers
5
Q
When the government imposes and collects an excise tax from producers of a product. What happens to supply curve?
A
It shifts upwards
6
Q
What is statutory incidence?
A
Who is legally responsible to pay the tax
7
Q
what is economic incidence?
A
is a group who actually bears the burden of tax
8
Q
What is tax wedge?
A
difference between price paid by consumers and suppliers
