Consider the following statements about tax incidence and its effects:
Statement I: Incidence of a tax on a good depends solely on who is legally responsible.
Statement II: In markets with elastic demand and inelastic supply, burden of tax is more likely to fall on producers.
Statement III: A higher tax incidence on consumers generally leads to a significant decrease in quantity demanded if price is elastic.
Which of the above statements are correct?
1
Only I and II
2
Only II and III
3
Only I and III
4
I, II, and III