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Figure: Model of a Competitive Market
-(Figure: Model of a Competitive Market) Given the figure Model of a Competitive Market, if a tax is imposed on sellers, the equilibrium price will _____ and the equilibrium quantity will _____.
A) increase; decrease
B) remain the same; increase
C) remain the same; decrease
D) increase; increase

Question

Use the following to answer questions:
Figure: Model of a Competitive Market 
-(Figure: Model of a Competitive Market) Given the figure Model of a Competitive Market, if a tax is imposed on sellers, the equilibrium price will _____ and the equilibrium quantity will _____.
A) increase; decrease 
B) remain the same; increase 
C) remain the same; decrease 
D) increase; increase

Quizplus · Accepted Answer

When a tax is imposed on sellers, the supply curve shifts upward by the amount of the tax, leading to an increase in the equilibrium price and a decrease in the equilibrium quantity.

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