The effect of a tax on a good and make both sellers and buyers better off.

Question

Quizplus · Accepted Answer

A tax on a good typically increases its price and reduces its quantity sold in the market. This can result in a loss of welfare for both buyers and sellers, as they have to pay more for the same amount of goods or receive less revenue for the goods they sell. While it is possible for a tax to lead to some positive outcomes (such as reducing negative externalities), it is unlikely to make both sellers and buyers better off in the absence of other factors.

The Effect of a Tax on a Good and Make