Economic Incidence of the Tax Assignment | Homework For You

5. Regardless of the statutory incidence of a commodity tax, the economic incidence of the tax is:

a. entirely on buyers if supply is perfectly inelastic.

b. entirely on buyers if demand is perfectly inelastic.

c. entirely on buyers if demand is perfectly elastic.

d. entirely on sellers if demand is perfectly inelastic.

Suppose aluminum foil and plastic wrap are perfect substitutes. If a tax is placed on aluminum foil but not on plastic wrap, the burden of the tax will fall on:

a. sellers since they cannot raise the price of aluminum foil.

b. sellers since the price of aluminum foil will increase by the amount of the tax.

c. buyers since the price of aluminum foil will increase by the amount of the tax.

d. both buyers and sellers since the price of aluminum foil cannot amount of the tax. Get Economics homework help today