When a tax is placed on the buyers of a product,a result is that
A)buyers effectively pay less than before and sellers effectively receive less than before.
B)buyers effectively pay less than before and sellers effectively receive more than before.
C)buyers effectively pay more than before and sellers effectively receive less than before.
D)buyers effectively pay more than before and sellers effectively receive more than before.

Question

Quizplus · Accepted Answer

When a tax is placed on the buyers of a product, the price of the product effectively goes up for the buyers, so they are paying more than before. However, the sellers are not necessarily receiving more than before, as the tax may cut into their profits. In fact, the sellers may end up receiving less than before, depending on the amount of the tax and the elasticity of demand for their product.

When a Tax Is Placed on the Buyers of a Product,a