Identifying the incorrect tax statement Steps:

• Define progressive tax as one where tax rate rises with income level.
• Assess its impact on income distribution and who bears the burden.
• Recall that ad valorem tax is a percentage of price, affecting supply curve differently than fixed taxes.
• Note indirect taxes are passed to consumers but can be evaded through choices.

Why C is correct:

• An ad valorem tax multiplies the price by (1 + tax rate), causing the supply curve to rotate or pivot upward from the origin, not shift parallel (parallel shifts occur with specific/fixed taxes per unit).

Why the others are wrong:

• A: Progressive taxes take larger proportions from high earners, redistributing income to reduce inequality.
• B: Progressive taxes impose higher rates on the rich, burdening them proportionally more than the poor.
• D: Consumers avoid indirect taxes by not buying taxed goods, purchasing untaxed alternatives, or in tax havens.

Final answer: C