When a tax is levied on a good,
A)government revenues exceed the loss in total welfare.
B)there is a decrease in the quantity of the good bought and sold in the market.
C)the price that sellers receive exceeds the price that buyers pay.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

When a tax is levied on a good, it typically leads to a decrease in the quantity of the good bought and sold because the tax increases the price buyers pay and decreases the price sellers receive, creating a wedge between the two.

When a Tax Is Levied on a Good