Question 1
Tax incidence is the
◦ behavior of shifting the tax to another party.
◦ ultimate distribution of a tax's burden.
◦ structure of the tax.
◦ measure of the impact the tax has on employment and output.
Question 2
Tax shifting
◦ is the way in which a tax is structured.
◦ is the ultimate distribution of a tax's burden.
◦ occurs when taxes cause prices to increase, but wages to fall.
◦ occurs when taxed agents can alter their behavior and do something to avoid paying a tax.