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In which of the following conditions, the whole incidence of tax lies on the sellers?

By Dalton's tax incidence formula \(\frac{\text{Incidence on Buyers}}{\text{Incidence on Sellers}} = \frac{e_s}{e_d}\), the entire incidence of a tax falls on the sellers…

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In which of the following conditions, the whole incidence of tax lies on the sellers?

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Correct answer A

By Dalton's tax incidence formula Incidence on BuyersIncidence on Sellers=esed\frac{\text{Incidence on Buyers}}{\text{Incidence on Sellers}} = \frac{e_s}{e_d}, the entire incidence of a tax falls on the sellers (zero shifting to buyers) when demand is perfectly elastic (ed=∞e_d = \infty) and/or supply is perfectly inelastic (es=0e_s = 0).

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