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Which of the following statements is correct concerning the burden of a tax imposed on take-out food?

A. Buyers bear the entire burden of the tax.
B. Sellers bear the entire burden of the tax.
C. Buyers and sellers share the burden of the tax.
D. We have to know whether it is the buyers or the sellers that are required to pay the tax to the government in order to make this determination.



Answer :

GinnyAnswer

Final answer:

The burden of a tax on take-out food is determined by the relative elasticities of demand and supply.


Explanation:

If demand is more inelastic than supply, consumers bear most of the tax burden, and if supply is more inelastic than demand, sellers bear most of the tax burden.


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