A tax on a good or service:

Question

Quizplus · Accepted Answer

When a tax is imposed on a good or service, it increases the price that buyers have to pay and reduces the amount of the good or service that sellers are willing to offer. As a result, the tax discourages market activity. The burden of the tax is shared between the buyers and sellers because the buyers have to pay a higher price and the sellers receive less revenue. Therefore, the correct answer is D, which states that a tax discourages market activity and is shared between buyers and sellers.

A Tax on a Good or Service