When a tax is placed on the buyers of cell phones,the size of the cell phone market

Question

Quizplus · Accepted Answer

When a tax is placed on the buyers of cell phones, the demand for cell phones decreases as buyers are forced to pay a higher price. As a result, the size of the cell phone market decreases. Additionally, the effective price received by sellers also decreases as buyers are willing to pay less for the same product. This is due to the fact that sellers have to either absorb some portion of the tax or pass it on to buyers in the form of higher prices. Therefore, the correct answer is A.

When a Tax Is Placed on the Buyers of Cell