When a tax can be transferred, what determines the actual burden of the tax?

Multiple choice question for Income Inequality. Select an option, then review the explanation below.

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The presence of complete or incomplete informationThe party legally responsible for remitting the taxThe responsiveness of demand and supply to price changesThe number of sellers in the market

Explanation

The true economic burden of a tax, or its incidence, is influenced by how sensitive buyers and sellers are to price changes, which is measured by the elasticities of demand and supply. Legal responsibility for paying the tax does not necessarily indicate who ultimately bears the cost.

Practice related questions from the same subject.

1.Which of the following best describes the Benazir Benefit Income Scheme?
2.Which category of tax does VAT best represent?
3.What does tax incidence refer to?
4.What does a progressive income tax system imply about the tax rate for individuals with higher earnings?
5.What does the marginal tax rate represent?

When a tax can be transferred, what determines the actual burden of the tax?

Explanation

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