Suppose sellers of liquor are required to send $1.00 to the government for every bottle of liquor they sell. Further, suppose this tax causes the price paid by buyers of liquor to rise by $0.80 per bottle. Which of the following statements is correct? a. This tax causes the demand curve for liquor to shift downward by $0.80 at each quantity of liquor. b. The incidence of the tax is summarized by the fact that sellers send the tax payments to the government. c. Eighty percent of the burden of the tax falls on buyers. d. All of the above are correct.
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