Regardless of whether a tax is imposed on buyers or sellers,it has the same effects: In general,the price paid by the buyers ________ and the price received by the sellers ________.

Question

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When a tax is imposed, it increases the cost of production for sellers. As a result, they increase the price of the product in order to maintain their profit margin. This leads to a higher price paid by buyers. However, since the buyers are now paying more for the product, they may choose to purchase less of it, leading to a decrease in quantity demanded. The decrease in quantity demanded puts downward pressure on prices, causing the price received by the sellers to fall. Therefore, both the price paid by the buyers and the price received by the sellers are affected, but in opposite directions.

Regardless of Whether a Tax Is Imposed on Buyers or Sellers,it