When a tax is imposed on a good, consumer surplus decreases and producer surplus remains unchanged.

Name: When a tax is imposed on a good, consumer surplus decreases and producer surplus remains unchanged.
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Question

Quizplus · Accepted Answer

When a tax is imposed on a good, both consumer surplus and producer surplus decrease because the tax creates a burden on both parties, leading to a reduction in the quantity sold and bought, which in turn reduces the surplus for both consumers and producers.

When a Tax Is Imposed on a Good, Consumer Surplus