When a tax is levied on a good:
A)the quantity of the good sold will change
B)the price of the good sold will change
C)both price and quantity of the good sold will change
D)neither price nor quantity of the good sold will change

Question

Quizplus · Accepted Answer

When a tax is levied on a good, both the price and quantity of the good sold will change. The price of the good sold will increase because the tax is added to the original price, and consumers are likely to buy fewer units of the good because the total price has increased. This leads to a decrease in the quantity of the good sold.

When a Tax Is Levied on a Good