What results from a per-unit tax on output in a market?
A) The quantity traded does not change.
B) A surplus is created at the new equilibrium price.
C) The quantity traded increases.
D) The quantity traded decreases.

Question

Quizplus · Accepted Answer

When a per-unit tax is imposed on output in a market, it increases the cost of production for the sellers. As a result, 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 traded. Therefore, the correct choice is D - the quantity traded decreases.

What Results from a Per-Unit Tax on Output in a Market