Answer: option d: increase the price of coffee paid by buyers, decrease the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee
Explanation: A tax levied on sellers of coffee will cause a leftward (decrease) in the supply curve. This is because tax increases the cost of production. In other words, with tax, it
would cost the seller more money to produce the same quantity he would have produced without tax. Therefore, the seller increases his price in order to maintain the same level of profit/revenue as before tax. The consumers of coffee responds to this increase in price as a result of tax by decreasing demand for coffee (the higher the price, the lower the quantity demanded). The result of this is that sellers would have to settle for a lower equilibrium quantity that consumers will buy at an higher equilibrium price. The effective price sellers receive is the price they get after tax is deducted, which will be lower than the initial price without tax. It should also be noted that the amount of decrease in effective price received by sellers depends on the elasticity of the demand curve and supply curve. The more elastic the demand curve, the lower the effective price received by sellers. Thus, tax will increase equilibrium price in the market for coffee (because cost of production increases), reduce the effective price received by sellers (equilibrium price minus tax) and reduce equilibrium quantity of coffee (because demand falls)
This explanation is based on the assumption that both the supply and demand curve are normal.