A tax placed on a good
A)causes the effective price to sellers to increase.
B)affects the welfare of buyers of the good but not the welfare of sellers.
C)causes the equilibrium quantity of the good to decrease.
D)creates a burden that is usually borne entirely by the sellers of the good.

Question

Quizplus · Accepted Answer

A tax placed on a good causes the cost of production and supply to increase, leading to a shift in the supply curve to the left, resulting in a higher price of the product, decreased demand, and a reduction in equilibrium quantity. Both producers and consumers are affected by the tax, with the burden being shared between them.

A Tax Placed on a Good