If Supply and Demand have the normal shapes not perfectly el

If Supply and Demand have the normal shapes (not perfectly elastic or inelastic), a tax on sellers will shift demand upward by less than the amount of the tax, and equlibrium posted price will increase by the same amount as the tax. True False

Solution

False.

If demand and supply are of regular shapes, burden of the tax imposed will be shared between sellers and buyers (called tax incidence), and equilibrium price will not increase by full amount of tax.