The imposition of an excise tax usually causes the price paid by consumers to ________,while the price received by sellers ________.
A)rise; remains unchanged
B)rise; falls
C)rise; rises
D)fall; remains unchanged
E)fall; falls

Question

Quizplus · Accepted Answer

An excise tax is typically imposed on specific goods or services, and is a per-unit tax that is paid by the seller to the government. When the tax is imposed, it increases the cost of production for the seller, which in turn leads to a decrease in the supply of the good or service. With a decrease in supply, the price paid by consumers will rise, while the price received by sellers will fall. Therefore, the correct answer is B- The price paid by consumers rises, while the price received by sellers falls.

The Imposition of an Excise Tax Usually Causes the Price