When the government imposes a specific tax per unit on a product, changes in consumer surplus are ________ and changes in producer surplus are ________.
A) negative; positive
B) positive; positive
C) negative; negative
D) positive; negative

Question

Quizplus · Accepted Answer

When a specific tax per unit is imposed on a product, both consumer surplus and producer surplus decrease. The tax increases the price paid by consumers and reduces the price received by producers, leading to a loss of surplus for both parties.

When the Government Imposes a Specific Tax Per Unit on a Product