-If a $1 sales tax is imposed on the sale of a CD, and neither the demand nor the supply is perfectly elastic or perfectly inelastic, then the price of a CD paid by consumers will

Question

Quizplus · Accepted Answer

When a sales tax is imposed, the burden of the tax is shared between consumers and producers, meaning the price for consumers will increase but by less than the full amount of the tax. This leads to a decrease in quantity demanded, hence fewer CDs will be bought.

-If a $1 Sales Tax Is Imposed on the Sale