If a tax is placed on tyres, then i. the equilibrium quantity of tyres will decrease.
Ii) a deadweight loss will be created.
Iii) the producer surplus will decrease.

Question

Quizplus · Accepted Answer

When a tax is placed on tyres, it affects the market by reducing the equilibrium quantity of tyres (i), creating a deadweight loss due to the reduction in market efficiency (ii), and decreasing the producer surplus because producers receive less for each tyre sold after the tax is imposed (iii).

If a Tax Is Placed on Tyres, Then I