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Find effect of tax on the market demand curve

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Reference no: EM132813467

The legal incidence of a tax has no effect on the economic incidence of a tax. When a tax's legal incidence is assigned to buyers, buyers are required to pay the tax by writing a check to the government.

Consider the case of a $5 excise tax where the legal incidence falls on buyers (i.e., buyers are legally required to pay the tax). What is the effect of this tax on the market supply curve? What is the effect of this tax on the market demand curve? Please illustrate.

Reference no: EM132813467

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