If a tax is increased,
A)consumers will pay a higher price.
B)consumers will lose consumer surplus.
C)producers will receive a lower price after taxes.
D)all of the above are true.

Question

If a tax is increased,
A)​consumers will pay a higher price.
B)​consumers will lose consumer surplus.
C)​producers will receive a lower price after taxes.
D)​all of the above are true.

Quizplus · Accepted Answer

When a tax is increased, the burden of the tax is often passed onto consumers through higher prices. This means that consumers will pay a higher price (choice A). Additionally, consumers will lose some of their consumer surplus due to the higher prices (choice B). Furthermore, producers may also receive a lower price after taxes are taken into account (choice C). Therefore, all of the above choices are true (choice D).

If a Tax Is Increased