Question

A tax on a good a. raises the price that buyers effectively pay and raises the price that sellers effectively receive. b. raises the price that buyers effectively pay and lowers the price that sellers effectively receive. c. lowers the price that buyers effectively pay and raises the price that sellers effectively receive. d. lowers the price that buyers effectively pay and lowers the price that sellers effectively receive.

Answer 1

Answer:

B) raises the price that buyers effectively pay and lowers the price that sellers effectively receive.

Explanation:

Taxes increase the price of goods, some do it directly like sales taxes and some indirectly like excise taxes, e.g. tax on gasoline. When the price of goods increase, the quantity demanded of the goods tends to decrease.

Although the largest effects of taxes are suffered by consumers, they also decrease the price that sellers effectively receive. This is specially true for excise taxes, that are included in the pre-tax price of a good. Consume demand is affected by an apparent price increase, but in reality only the excise taxes increase, while the seller receives the same amount of money.

Answer 2

Answer:

b. raises the price that buyers effectively pay and lowers the price that sellers effectively receive.

Explanation:

Tax can be described as a compulsory amount of money levied on individuals or corporations by the government.

If tax is levied on a good ,it increases the price of the good so it effectively increases the amount buyers pay. A proportion of the amount received on the sale of the product is paid to the government, so the amount sellers effectively receive is lower.

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