When a tax is placed on the sellers of cell phones,

Question

Quizplus · Accepted Answer

When a tax is placed on the sellers of cell phones, the cost of producing and selling the phones will increase. This increased cost will likely be passed on to the buyers in the form of higher prices. As a result, some buyers will be discouraged from purchasing a cell phone, which will decrease the size of the market. Thus, the size of the cell phone market decreases, but the price paid by buyers increases.

When a Tax Is Placed on the Sellers of Cell