Question

When tires are taxed and sellers of tires are required to pay the tax to the government, Group of answer choices the price paid by buyers of tires decreases. the quantity of tires bought and sold in the market is reduced. there is a movement downward and to the right along the demand curve for tires. the demand for tires decreases.

Answer 1

The correct option is, the quantity of tires bought and sold in the market is reduced.

When tires are taxed and sellers of tires are required to pay the tax to the government?

• The amount of tires purchased and sold on the market decreases when tires are taxed and tire vendors are compelled to pay tax to the government.
• The loss of consumer and producer surpluses that are not accounted for in government revenue.

When a tax is placed on a product the price paid by buyers?

• In general, taxes increase the price consumers pay, decrease the price sellers receive, and decrease the amount of goods sold.
• A tax must result in a deadweight loss if it is imposed on a good and sales volume is decreased.

What is deadweight loss?

• The cost of market inefficiency, which happens when supply and demand are out of balance, is known as a deadweight loss.
• Deadweight loss, a term mostly used in economics, refers to any deficit brought on by an ineffective resource allocation.

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