Answer to Question #274665 in Microeconomics for Arya

Question

how does a tax on a good affect the price paid by the buyer, the price received by the seller, and the quantity sold ?

Answer 1

Solution:

The tax of a good tends to increase the price of a particular purchase by a seller. Therefore, the buyer will pay a higher price due to taxes. As such, the seller will receive the price of a particular good inclusive of taxes, that is higher prices. The quantity sold will decrease since the goods will be more expensive as a result of the inclusion of taxes.