Question

Taxes are a part of a civil society, but they have a significant effect on supply and

demand for goods. A tax is an extra cost added to an exchange. What is the effect of

tax on a markets equilibrium point?

Select the correct answer below:

O price is higher and quantity is lower

price is lower and the quantity is higher

tax increases supply and demande

there is no effect

Answer 1

O price is higher and quantity is lower

Step-by-step explanation:

Taxes are compulsory levies, fines that businesses have to make to the government. Taxes are imposed on income of workers, profits made on businesses and on imports.

When goods are taxed, it raises the price of good. Depending on how much the tax amount is, a good may become very expensive and this decreases quantity supplied.

Tax would increase the amount that buyers pay for a good, and reduce the quantity of goods that are being supplied to a seller.