One result of a tax,irrespective of whether the tax is placed on the buyers or the sellers,is that the
A)size of the market is unchanged.
B)price the seller effectively receives is higher.
C)supply curve for the good shifts upward by the amount of the tax.
D)tax reduces the welfare of both buyers and sellers.

Question

Quizplus · Accepted Answer

A tax imposed on either buyers or sellers will always result in a decrease in the quantity transacted and the burden of the tax is shared by both parties. Buyers will likely purchase less of the good due to the higher price, and sellers will also produce and supply less due to the increased cost of production. Therefore, the market size will decrease, and the welfare of both buyers and sellers is reduced. Additionally, the supply curve will shift upwards by the amount of the tax, as the seller now has to receive a higher price to cover the cost of the tax.

One Result of a Tax,irrespective of Whether the Tax Is