Question

Policymakers who wish to discourage businesses that pollute by taxing them:

• should place a tax on producers instead of the consumers in order to increase the burden on sellers.

• forget that some of the tax burden will be shared by consumers.

• forget that businesses will pass the entire tax onto consumers of their products.

• should place a tax on consumers instead of the producers in order to increase the burden on sellers.

Answer 1

Option B is correct, some of tax burden will pass on CONSUMERs

The share of burden depends on elasticity,not on whom you charged tax.

If demand is relatively elastic then seller will share more burden of tax .

If supply is relatively elastic then CONSUMER will share more burden of tax.

But with standard demand and supply ,both CONSUMERs and seller will share some part of taxes.

So option B is correct