When a tax is levied on the sale of an item,
A) consumers will generally buy more of it.
B) producers will generally supply more of it.
C) the price (including the tax) of the product will generally decline.
D) less of the item will generally be bought and sold.

Question

Quizplus · Accepted Answer

When a tax is levied on the sale of an item, the price of the item will increase for both the consumers and producers. This makes the item less affordable and reduces the demand for the item. Hence, less of the item will be bought and sold.

When a Tax Is Levied on the Sale of an Item