Asked by Jenna Grace Milionis on Jun 19, 2024
Verified
A tax on the sellers of bottled water will increase the price of bottled water paid by buyers,
A) increase the effective price of bottled water received by sellers, and increase the equilibrium quantity of bottled water.
B) increase the effective price of bottled water received by sellers, and decrease the equilibrium quantity of bottled water.
C) decrease the effective price of bottled water received by sellers, and increase the equilibrium quantity of bottled water.
D) decrease the effective price of bottled water received by sellers, and decrease the equilibrium quantity of bottled water.
Bottled Water
Bottled water is drinking water packaged in plastic or glass bottles, and it may or may not be carbonated.
Equilibrium Quantity
Equilibrium quantity is the amount of goods or services supplied and demanded at the equilibrium price, where market supply and demand balance each other.
- Explain the impact of taxes on market equilibrium, price, and quantity.
- Comprehend how taxes affect supply and demand curves and market equilibrium.
Verified Answer
ER
Erica Richter
Jun 23, 2024
Final Answer :
D
Explanation :
A tax on sellers reduces the effective price received by them because they have to pay a part of their revenue as tax. This leads to a decrease in supply, which increases the price for buyers and decreases the equilibrium quantity of bottled water.
Learning Objectives
- Explain the impact of taxes on market equilibrium, price, and quantity.
- Comprehend how taxes affect supply and demand curves and market equilibrium.