What does a tax placed on a good do
A)It causes the price of the good to fall.
B)It affects buyers of the good, but not sellers.
C)It causes the size of the market for the good to shrink.
D)It affects sellers of the good, but not buyers.

Question

Quizplus · Accepted Answer

A tax placed on a good increases the price of the good for buyers, which can lead to a decrease in demand and a decrease in the size of the market. This means that fewer people may be willing to buy the good at the higher price, causing the market for the good to shrink.

What Does a Tax Placed on a Good Do