A tax placed on a good can make that good relatively more expensive and its substitutes relatively less expensive.

Name: A tax placed on a good can make that good relatively more expensive and its substitutes relatively less expensive.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

When a tax is placed on a good, the price of that good increases, making it relatively more expensive compared to its substitutes. As a result, consumers may switch to substitute goods that are relatively less expensive, thus increasing their demand and price.

A Tax Placed on a Good Can Make That Good