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Imagine the government of Texas proposes an increased tax on cars to help finance government programs....

Imagine the government of Texas proposes an increased tax on cars to help finance government programs. Which is likely to happen? A. the burden of the tax will belong exclusively to producers B. the burden of the tax will belong exclusively to consumers C. car profits will increase D. car sales will fall

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1.The demand for cars is elastic as there are a couple of substitutes of cars like public transportation,bikes,cabs etc.Because demand is elastic,the burden of tax will fall mostly on producers.However,the burden will not fall exclusively on buyers or sellers.It is although definite that car sales would fall.

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