Suppose that the market for pizza is perfectly competitive with constant long-run marginal cost. If there is a per-unit sales tax on pizza, then which of the following is correct?
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DSE 2021 Question 21: Taxation: incidence and efficiency
Answer and worked solution
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Taxation: incidence and efficiency has come up 79 times in 7 exams since 2009.
What this question tests
This question is on Tax incidence, part of Taxation: incidence and efficiency in Public Economics.
Who actually bears a tax, whoever the law makes pay.
TestStop has 26 past-paper questions on this subtopic.
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Question from the DSE 2021 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.