When a tax is levied on a good. the buyers and sellers of the good share the burden.

Updated on August 6, 2022

When a tax is l a. b. c. 25. evied on a good, the buyers and sellers of the good share the burden, provided the tax is levied

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d. regardless of how the tax is levied

Whenever tax is levied that means the prices will go up and when
prices go up that means that the demand will decrease which is a
loss for the supplier too. So when the tax is levied it is borne by
the buyer and the seller both so that demand is maintained with not
much loss to either of the party. But, yes how much it will be
shared depends upon the elasticity of the supply and demand of the


b. raises the price that buyers effectively pay and lowers the
price that sellers effectively receive

when tax is levied which means the price of the good goes up and
buyer has to pay more and the burden of it is borne by the seller
too so his income is effectively reduced too.


d. without additional information, such as the elasticity of
demand for this product, it is impossible to compare the cost of
tax to buyers and sellers with tax revenue

Tax factor is borne by both the buyer and seller to maintain the
fairly good equilibirum so that the demand and supply factors are
functioning well in the market and anyone do not have to face the
full loss. But who faces how much loss is determined by the
elasticity of the demand and supply too, so these information also
needs to be given then only we can exactly determine the cost of

a. decline in total surplus that results from a tax

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Harm caused to economic efficiency and production due to tax is
referred to as Deadweight loss. It affects the cost of living and
thereby the surplus and there is reduction in the output.