If a tax shifts the demand curve downward,
A)we can infer that the tax was levied on buyers of the good.
B)we can infer that the tax was levied on sellers of the good.
C)we can infer that the tax was levied on both buyers and sellers of the good.
D)we cannot infer anything because the shift described is not consistent with a tax.

Question

Quizplus · Accepted Answer

When a tax is levied on buyers, it effectively increases the price they have to pay, which decreases their willingness to buy the good at each price level, shifting the demand curve downward.

If a Tax Shifts the Demand Curve Downward