a $1 per unit tax levied on consumers of a good is equivalent to

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Gabetrojanowski7035idn Gabetrojanowski7035idn

01-10-2021
Business

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a $1 per unit tax levied on consumers of a good is equivalent to

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Baraqidn Baraqidn · Answer 1 · 2021-10-15T11:13:20-04:00

Based on accounting principles, a $1 per unit tax levied on consumers of a good is equivalent to "a $1 per unit tax levied on producers of the good."

This is based on the idea that the market reaches the exact equilibrium price irrespective of who is accountable for paying the money to the government.

In other words, when the government levies a tax on a good, producers are not exempted from the tax levy because that money will be recouped from the producers' sales or revenue.

Hence, in this case, it is concluded that tax on goods is inevitable to consumers and producers.

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