Use the following to answer question(s): Model of a Competitive Market

-(Exhibit: Model of a Competitive Market) If a tax is imposed on sellers, the equilibrium price will _______ and the equilibrium quantity will _______ .
A) increase; decrease
B) remain the same; increase
C) remain the same; decrease
D) increase; increase

Question

Use the following to answer question(s): Model of a Competitive Market
 
-(Exhibit: Model of a Competitive Market) If a tax is imposed on sellers, the equilibrium price will _______ and the equilibrium quantity will _______ .
A) increase; decrease 
B) remain the same; increase 
C) remain the same; decrease 
D) increase; increase

Quizplus · Accepted Answer

When a tax is imposed on sellers in a competitive market, the cost of supplying the goods increases. This typically leads to an increase in the price consumers pay (though the full tax may not be passed on to consumers) and a decrease in the equilibrium quantity, as the higher price reduces the quantity demanded.

Use the Following to Answer Question(s): Model of a Competitive