Whether a tax is levied on sellers or buyers,taxes discourage market activity.

Question

Quizplus · Accepted Answer

Taxes increase the overall cost of a good or service, reducing demand and supply. If the cost of production is higher for sellers, they may decrease the quantity they supply or raise prices to compensate, resulting in less market activity. Similarly, if buyers face higher costs due to taxes, they may reduce their purchases or seek alternative products, leading to reduced demand and market activity.

Whether a Tax Is Levied on Sellers or Buyers,taxes Discourage