The graph shown demonstrates a tax on sellers.Which of the following can be said about the effect of this tax?

Question

Quizplus · Accepted Answer

When a tax is imposed on sellers, they will increase the price of their product to cover the cost of the tax. This leads to an increase in the price paid by buyers, and a decrease in the price received by sellers, creating a tax wedge. The tax revenue is the amount of money collected by the government from the tax, which is equal to the distance between the supply curve and the new equilibrium quantity. Therefore, option A is the correct choice.

The Graph Shown Demonstrates a Tax on Sellers