Asked by Micah Jones on Apr 28, 2024
Verified
When a tax is imposed on sellers, producer surplus decreases but consumer surplus increases.
Producer Surplus
The difference between what producers are willing to accept for a good versus what they actually receive, often seen as a measure of producer welfare.
Consumer Surplus
The disparity between the cost consumers are prepared to pay for a good or service and the cost they actually encounter.
- Apprehend the consequences of taxes on the harmony of market forces, particularly in relation to changes in consumer surplus, producer surplus, and government revenues.
- Apprehend the variance in the economic consequences of taxation on consumers versus those on vendors.
Verified Answer
AA
Ayesha ArakhanMay 01, 2024
Final Answer :
False
Explanation :
When a tax is imposed on sellers, both producer surplus and consumer surplus decrease because the tax creates a burden that typically leads to higher prices for consumers and lower effective revenue for producers, thus reducing the economic welfare of both parties.
Learning Objectives
- Apprehend the consequences of taxes on the harmony of market forces, particularly in relation to changes in consumer surplus, producer surplus, and government revenues.
- Apprehend the variance in the economic consequences of taxation on consumers versus those on vendors.