A tax on the seller of a product:

Question

Quizplus · Accepted Answer

A tax on the seller effectively increases their production costs, thus shifting the supply curve to the left, resulting in a decrease in the quantity traded in the market. Option A is incorrect because the tax impacts the seller's revenue, not the buyer's take-home price. Option B is incorrect because a tax would not cause the demand curve to shift, as it does not affect consumer preferences or income. Option D is also incorrect because as explained earlier, a tax will reduce the equilibrium quantity traded.

A Tax on the Seller of a Product