Economics (AS & A Level) · Oct / Nov 2022 · Paper 13 · Question 18
9708Methods and effects of government intervention in markets
What does the incidence of an indirect tax on a product refer to?
- Athe proportion of the tax paid by the consumer relative to the producer
- Bthe reduction in output as a result of the imposition of the tax
- Cthe revenue the tax generates for the government
- Dthe increase in the hidden economy as a result of tax evasion after the tax is imposed
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Correct answer: A. the proportion of the tax paid by the consumer relative to the producer
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