Question

If the government removes a $4 tax on buyers of restaurant meals and imposes the same 4 tax on sellers of restaurant meals, then the price paid by buyers will
A. decrease, and the price received by sellers will decrease.
B. decrease, and the price received by sellers will not change.
C. not change, and the price received by sellers will not change.
D. not change, and the price received by sellers will decrease.

Answer 1

Answer:

C. not change, and the price received by sellers will not change.

Explanation:

Because previously there was a tax of the same ammoutn nothing will change. The sellers will will transfer the tax into the price therefore, the after-tax proceeds will not change netiher the selling price. The same effect of the consumer tax will occur again, some or the entire tax will be pay for the seller or the consumer based on the elasticity of the supply and demand curve.

The effect of chaging the law will not alter the economic reality of translate taxes into consumers