What effect does a tax placed on a product have on the buyer and the seller
A)The price the buyer pays and the price the seller receives are higher.
B)The price the buyer pays and the price the seller receives are lower.
C)The price the buyer pays is lower and the price the seller receives is higher.
D)The price the buyer pays is higher and the price the seller receives is lower.

Question

Quizplus · Accepted Answer

When a tax is placed on a product, the price that buyers pay will increase (by the amount of the tax), and the price that sellers receive will decrease (by the amount of the tax). This is because sellers will need to increase their prices in order to cover the cost of the tax, but buyers will then be less willing (or able) to pay those higher prices, leading to a decrease in demand and a decrease in the price received by sellers. Overall, the net effect is that both buyers and sellers are worse off as a result of the tax.

What Effect Does a Tax Placed on a Product Have