Final answer:
The correct choice is b) buyers pay more for the product, and sellers receive less revenue than before a tax is imposed. This outcome reflects the fact that taxes increase costs for sellers and market prices for buyers. The distribution of the burden joins on the elasticity of demand and supply.
Step-by-step explanation:
When a tax is placed on the sellers of a product, buyers typically pay more, and sellers receive less than they did before the tax. The correct answer to the student's question is b) more, and sellers receive less than they did before the tax. This scenario occurs because the tax on sellers effectively increases the costs of production, leading to a higher market price. Sellers get less because they have to use part of the revenue to pay the tax. Moreover, the final distribution of the tax burden between buyers and sellers depends on the price elasticity of demand and supply.
If demand is more inelastic than supply, consumers bear most of the tax burden, meaning they experience a higher price increase compared to the decrease in sellers' revenue. Conversely, if supply is more inelastic than demand, sellers bear a larger share of the tax burden. The tax revenue is represented by the shaded area in tax incidence diagrams, and the difference in tax incidence on consumers and sellers is determined by the elasticity of demand and supply curves. In cases where demand is relatively more elastic, consumers are likely to reduce their quantity demanded significantly in response to higher prices, leading to lower tax revenue.