A tax leads to a(n)_____ in consumer surplus and a(n)_____ in producer surplus.

Question

Quizplus · Accepted Answer

When a tax is imposed on a market, the price of the good or service increases for consumers, which leads to a decrease in consumer surplus. On the other hand, producers receive less revenue due to the tax, which leads to a decrease in producer surplus. Therefore, both consumer and producer surplus decrease as a result of a tax, making the best choice D.

A Tax Leads to A(n)_____ in Consumer Surplus and A(n)_____

A Tax Leads to A(n)_ in Consumer Surplus and A(n)_