Question

In: Economics

what determines who bears the most burden of tax

what determines who bears the most burden of tax

Solutions

Expert Solution

Tax incidence is the way where the taxation rate is separated among buyers as well as sellers. The incidence of tax relies upon the relative value versatility of organic market. At the point when supply is more flexible than request, purchasers bear the vast majority of the taxation rate. At the point when request is more versatile than supply, makers bear the greater part of the expense of the tax.

Ordinarily, the frequency or the burden of an expense falls both on the customers and makers of the burdened great. Be that as it may, in the event that we need to foresee which gathering will bear a large portion of the burden, we should simply analyze the flexibility of demand and supply.

In case of inelastic demands, buyers are not exceptionally receptive to value changes, and the amount requested remains moderately consistent when the assessment is presented. At the point when an assessment is presented in a market with an inelastic stockpile—such as, beachfront inns—venders must choose the option to acknowledge lower costs for their business. Expenses don't significantly influence the equilibrium amount. The taxation rate for this situation is on the merchants. In the event that the stockpile were flexible and dealers had the chance of rearranging their organizations to abstain from providing the burdened great, the taxation rate on the venders would be a lot littler, and the assessment would bring about a much lower amount sold rather than lower costs got.


Related Solutions

By using the partial equilibrium framework, explain who bears the burden of an ad valorem tax...
By using the partial equilibrium framework, explain who bears the burden of an ad valorem tax levied on buyers i.e. consumers.
Explain who bears the burden of government debt and why. Under what circumstances is there no...
Explain who bears the burden of government debt and why. Under what circumstances is there no burden to be borne of government debt? Country: United States
Who bears the burden of proof has consequences for which side may prevail in a court...
Who bears the burden of proof has consequences for which side may prevail in a court of law--and in other contexts as well. The burden of proof at NASA, in the 1970s, was on those who claimed a spacecraft was safe to launch. Just prior to the 1986 Challenger disaster, the burden was shifted: the vehicle was presumed safe, and engineers raising doubts about its safety bore the burden of proving 'genuine risk' in order to stop the launch. Morton...
Who will bear the burden of tax if the tax is collected from the supplies, if...
Who will bear the burden of tax if the tax is collected from the supplies, if A. Supply is perfectly elastic? B. Supply is perfectly inelastic? C. Demand is perfectly elastic? D. Demand is perfectly inelastic?
What is the burden rate? What is the direct rate? What are the most common burden...
What is the burden rate? What is the direct rate? What are the most common burden rates? What does it mean when a burden rate is empirical? Provide the full burden rate for a labor resource at an hourly rate of 43.25 given a Direct labor overhead rate of 80%, general and Administrative Rate of 15%, Profit Rate of 25%, and a Fee rate of 3%? What is the multiplying Factor? Make sure you define all terms and provide all...
progressive tax,  regressive tax,  proportional tax Who benefits from each and who does the burden fall on in...
progressive tax,  regressive tax,  proportional tax Who benefits from each and who does the burden fall on in each? what are the examples of each tax?
U.S. country's tariffs have pushed foreign exporters to lower their prices. who actually bears the burden...
U.S. country's tariffs have pushed foreign exporters to lower their prices. who actually bears the burden of the tariff? a. U.S.government b. The U.S. buyers of imports c. The U.S.firms that compete with imports d. The foreign exporters that are required to pay the tariffs to u.s. government
Explain why the allocation of the tax burden does not depend on who pays a tax...
Explain why the allocation of the tax burden does not depend on who pays a tax to the government? Do the economic effects of a tariff depend on who pays it? Why or why not? What are some ways that companies can reduce the currency risk they face? What is the advantage of equity financing over debt financing?
Tax burden
Let QD=80-P and QS=2P-100 describe the demand and supply function for a commodity. Suppose that government imposes a $3 tax per unit sold on producers. What is the tax burden (incidence) of consumers?
What are the three types of tax systems?   What happens to the average tax burden as...
What are the three types of tax systems?   What happens to the average tax burden as income increases in each of the systems? What are some examples of each type?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT