Q.

The incidence of sales tax falls on -

A. Consumers
B. Wholesale dealers
C. Retail dealers
D. Producers
Answer» A. Consumers
Explanation: In economics, tax incidence is the analysis of the effect of a particular tax on the distribution of economic welfare. Tax incidence is said to "fall" upon the group that ultimately bears the burden of, or ultimately has to pay the tax. The key concept is that the tax incidence or tax burden does not depend on where the revenue is collected, but on the price elasticity of demand and price elasticity of supply.
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