Asked by Jiwanjot Singh on Jun 25, 2024
Verified
If the government removes a tax on a good, then the price paid by buyers will
A) increase, and the price received by sellers will increase.
B) increase, and the price received by sellers will decrease.
C) decrease, and the price received by sellers will increase.
D) decrease, and the price received by sellers will decrease.
Tax
An obligatory financial contribution or another kind of levy enforced on taxpayers by government entities to support government operations and a range of public spending.
Price Paid
The sum of money given in exchange for a product or service when bought.
Price Received
Price received is the amount of money paid to a seller for goods or services, as agreed upon by the seller and the buyer.
- Comprehend how taxes and removal of taxes affect market prices and equilibrium.
Verified Answer
ZK
Zybrea KnightJul 02, 2024
Final Answer :
C
Explanation :
Removing a tax on a good decreases the price paid by buyers and increases the price received by sellers, as the removal of the tax reduces the cost to buyers and allows sellers to retain more of the sale price.
Learning Objectives
- Comprehend how taxes and removal of taxes affect market prices and equilibrium.