An unintended effect of a new tax placed on the producers of good A may include

Question

Quizplus · Accepted Answer

A new tax placed on the producers of good A will increase their production costs, which will most likely lead to a higher price paid by the consumers of good A. This reduction in consumer surplus will lead to less consumers' surplus for the buyers of good A. The increased production costs may also lead to fewer workers employed in the production of good A. Therefore, all options a, b, and c are correct. Option D is not correct as the tax will most likely decrease the supply of good A, not increase it.

An Unintended Effect of a New Tax Placed on the Producers