The Figure Below Shows the Demand and the Supply in a Market

question 146

Multiple Choice

The figure below shows the demand and the supply in a market before and after a tax is imposed. The demand and the supply curves are straight lines.

-Refer to the figure above.What is the incidence of this tax on buyers? What is the incidence of this tax on sellers?

• A) The tax incidence on buyers is 50 percent, and the tax incidence on sellers is 50 percent.
• B) The tax incidence on buyers is 75 percent, and the tax incidence on sellers is 25 percent.
• C) The tax incidence on buyers is 25 percent, and the tax incidence on sellers is 50 percent.
• D) The tax incidence on buyers is 65 percent, and the tax incidence on sellers is 35 percent.

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