(Figure: A Competitive Market in the Presence of Externalities) Use Figure: A Competitive Market in the Presence of Externalities. Given the figure, if a tax is imposed on sellers, the equilibrium price will _____, and the equilibrium quantity will _____.

Question

Quizplus · Accepted Answer

When a tax is imposed on sellers, it increases their costs of production which shifts the supply curve leftward. This results in a higher equilibrium price and a lower equilibrium quantity.

(Figure: a Competitive Market in the Presence of Externalities) Use