A tax on milk would likely cause a decrease in the

Question

Quizplus · Accepted Answer

When a tax is imposed on a good, it increases the price that consumers pay and reduces the quantity of the good sold. In the case of milk, a tax would increase the price of milk, and consumers would likely respond by buying less milk. This would lead to a decrease in the amount of milk sold. The price of products made from milk would not be directly affected by the tax since the key factor driving their price is the cost of milk as an input, not the tax on milk. The revenues from the milk tax would depend on the size of the tax and the extent of the decrease in milk sales. Finally, the deadweight loss from the milk tax would depend on the elasticities of demand and supply for milk, as well as the size of the tax.

A Tax on Milk Would Likely Cause a Decrease in the