Identify whether the statements about the economics of taxes are true or false. The incidence of a tax is determined by which group (buyers or sellers) must actually pay the government. When demand is inelastic and supply is elastic, the burden of a tax falls mainly on producers. When demand is elastic and supply is inelastic, the burden of a tax falls mainly on consumers. An excise tax can distort incentives and create missed opportunities for mutually beneficial transactions.
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