Currently, Federal and State Gasoline Taxes (Imposed Statutorily on the Sellers

Multiple Choice

Currently, federal and state gasoline taxes (imposed statutorily on the sellers of gasoline) amount to about $.45 per gallon. Suppose the current price of gasoline is $1.20 per gallon, and that if the tax was not in place, the price would be only $.80.

A) The full incidence of the tax is falling on consumers.
B) The full incidence of the tax is falling on suppliers.
C) A $.05 burden is being borne by sellers and $.40 by consumers.
D) A $.05 burden is being borne by consumers and $.40 by sellers.