If the government levies a $500 tax per car on buyers of cars,then the price received by sellers of cars would

Question

Quizplus · Accepted Answer

The tax of $500 per car would increase the overall cost of purchasing a car, which would likely decrease demand for cars. As a result, sellers would likely have to reduce their prices in order to entice buyers to make a purchase. However, it is unlikely that the reduction in price would be equal to the full $500 tax, as sellers may absorb some of the cost themselves. Therefore, the price received by sellers would likely decrease by less than $500.

If the Government Levies a $500 Tax Per Car on Buyers