Which of the following best describes why the government is not able to decide whether it will be consumers or producers will pay a tax. a.The tax changes the equilibrium price, so that producers and consumers share the burden of the tax. b.The tax corrects an externality. c.Producers will always pass the entire tax onto consumers d.A tax on consumers will result in an increase in supply

To find : Why government can't decide who will pay tax.

Answered: government is not able to decide…

Principles of Microeconomics (MindTap Course List)

8th Edition

ISBN:9781305971493

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter8: Application: The Cost Of Taxation

Section8.1: The Oeadweight Loss Of Taxation

Problem 1QQ

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Which of the following best describes why the government is not able to decide whether it will be consumers or producers will pay a tax.

	a.	The tax changes the equilibrium price, so that producers and consumers share the burden of the tax.
	b.	The tax corrects an externality.
	c.	Producers will always pass the entire tax onto consumers
	d.	A tax on consumers will result in an increase in supply

Definition Video Definition Point where the demand and supply curves intersect. At the equilibrium price the quantity supplied of a good is equal to the quantity demanded. When the market is not in equilibrium, market surplus or market shortage occurs. The region that is above the price equilibrium indicates market surplus and the region below the price equilibrium indicates market shortage. Video

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