When a tax is placed on a product,the price paid by buyers
A)rises,and the price received by sellers rises.
B)rises,and the price received by sellers falls.
C)falls,and the price received by sellers rises.
D)falls,and the price received by sellers falls.

Question

Quizplus · Accepted Answer

When a tax is placed on a product, the price paid by buyers increases to include the tax. However, the price received by sellers falls because they must either absorb some of the tax and decrease their revenue or pass on the entire tax to the buyer, which may result in a decrease in demand for their product. Therefore, the price paid by buyers increases, and the price received by sellers falls.

When a Tax Is Placed on a Product,the Price Paid