This graph shows a market where a tax has been imposed on the buyers of a good.
A market with a tax on buyers of a good

What letters represent the tax burden of sellers?

Choose 1 answer:
(A) None, since the buyers of a good were taxed
(B) $C$
(C) $B$
(D) $D$
(E) $E$

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Taxation and dead weight loss

Question

This graph shows a market where a tax has been imposed on the buyers of a good.
A market with a tax on buyers of a good

What letters represent the tax burden of sellers?

Choose 1 answer:
(A) None, since the buyers of a good were taxed
(B) $C$
(C) $B$
(D) $D$
(E) $E$

Related content
Taxation and dead weight loss

Accepted Answer

∻Solution∻ ‖ a ⋮ Tax Incidence: When a tax is imposed on buyers, the demand curve shifts downward by the amount of the tax. This results in a new equilibrium where both buyers and sellers share the tax burden. ‖ ‖ b ⋮ Identifying Tax Burden: The tax burden on sellers is represented by the area between the original supply curve (S1) and the new equilibrium price after the tax is imposed. In this graph, this area is labeled as $C$. ‖ ∻Answer∻ ⚹ (B) $C$ ⚹ ∻Key Concept∻ ⚹ Tax Incidence ⚹ ∻Explanation∻ ⚹ When a tax is imposed on buyers, the demand curve shifts downward, and the tax burden is shared between buyers and sellers. The area representing the tax burden on sellers is labeled $C$ in the graph. ⚹◊What is the formula to calculate the tax burden of sellers in a market with a tax on buyers of a good?⍭ Generate me a similar question◊

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