When a per-unit tax is levied on a goods market in which supply is not perfectly inelastic but such a tax nevertheless does not give rise to any deadweight loss, consumers are made no worse off by the imposition of the tax.

Question

Quizplus · Accepted Answer

A per-unit tax, even without deadweight loss, typically increases the price consumers pay and/or decreases the price producers receive, making consumers worse off through higher prices or reduced availability of the good.

When a Per-Unit Tax Is Levied on a Goods Market