When a tax is imposed on a market:

Question

Quizplus · Accepted Answer

All of these statements are true when a tax is imposed on a market. 
A) The price the buyer pays is higher than the amount the seller receives because the tax is added to the price paid by the buyer, and the seller receives only the portion of the price less the tax. 
B) The buyers' equilibrium tax-inclusive price increases and the equilibrium quantity decreases because the tax raises the cost of producing and selling the good, reducing the supply and increasing the price. 
C) Fewer total transactions take place in the market because some potential buyers and sellers may decide not to trade at the new equilibrium price with the tax.

When a Tax Is Imposed on a Market