When a tax is imposed on a good, the actual incidence of the tax generally?

When a tax is imposed on a good, the incidence of the tax refers to the distribution of the burden of the tax between buyers (consumers) and sellers (producers). There are two primary types of tax incidence:

1 Buyer Incidence (Burden on Consumers): If the price paid by consumers (after the tax is imposed) increases more than the price received by producers decreases, then consumers bear a larger share of the tax burden. In this case, the tax is said to be "shifted" toward the buyers.

2 Seller Incidence (Burden on Producers): If the price received by producers decreases more than the price paid by consumers increases, then producers bear a larger share of the tax burden. In this case, the tax is said to be "shifted" toward the sellers.

The actual incidence of the tax is influenced by the elasticity of demand and supply for the good:

If the demand for the good is relatively inelastic (insensitive to price changes), consumers may bear a larger share of the tax burden because they are less responsive to price increases.

If the supply of the good is relatively inelastic, producers may bear a larger share of the tax burden because they are less responsive to changes in the price they receive.

Conversely:

If demand is elastic (sensitive to price changes), consumers may bear a smaller share of the tax burden.

If supply is elastic, producers may bear a smaller share of the tax burden.

The concept of tax incidence is an important consideration in tax policy and economic analysis because it helps to understand how the burden of a tax is distributed in the marketplace. However, it's essential to note that the actual incidence of a tax can be complex and may depend on various factors, including market conditions, the relative responsiveness of buyers and sellers to price changes, and the specific details of the tax structure.