The initial effect of a tax on the sellers of a good is on:

Question

Quizplus · Accepted Answer

A tax on the sellers of a good increases their costs of production, which in turn reduces the profitability of producing and selling the good. This leads to a decrease in the supply of that good, as some sellers may exit the market or produce and sell less of the good at the existing price. Therefore, the initial effect of a tax on the sellers of a good is on the supply of that good.

The Initial Effect of a Tax on the Sellers of a Good