Governments may use microeconomic models to study the effects of a new tax on
A) the prices consumers pay.
B) the money supply.
C) the prices charged by producers.
D) A and C

Question

Quizplus · Accepted Answer

A new tax can have an impact on both the prices that consumers pay (through higher prices on taxed goods) and the prices charged by producers (as they may pass the cost of the tax onto consumers through higher prices). Therefore, microeconomic models can be used to study the effects on both A and C. The money supply, on the other hand, is more of a macroeconomic concept and would not be directly impacted by a new tax.

Governments May Use Microeconomic Models to Study the Effects of a New