The incidence of sales tax ison the seller when the demand curve
Perfectly elastic demand holds buyer price fixed, so sellers absorb tax through lower net price with ordinary upward-sloping supply. Perfectly inelastic demand burdens…
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The incidence of sales tax ison the seller when the demand curve
Answer and explanation
Correct answer B
Perfectly elastic demand holds buyer price fixed, so sellers absorb tax through lower net price with ordinary upward-sloping supply. Perfectly inelastic demand burdens buyers; rectangular hyperbola or moderate elasticity generally shares the burden depending also on supply.
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UGC NET Economics