Question

When a tax is levied on sellers of tea, a. sellers of tea are made worse off, and the well-being of buyers is unaffected. b. both sellers and buyers of tea are made worse off. c. the well-being of both sellers and buyers of tea is unaffected. d. sellers of tea are made worse off, and buyers of tea are made better off.

Answer 1

Answer: B.

Explanation: The answer is B because the one who have to buy the tea will have to pay more than what they use to pay and it is bad for the sellers because they will make less profit(money).

Answer 2

both sellers and buyers of tea are made worse off.

Step-by-step explanation:

When a tax is levied on sellers of tea, both sellers and buyers of tea are made worse off.

The truth about tax burden or incidence of tax is that when a tax is levied on a product, the sellers of that product try as much as possible to transfer some of it to the buyers by increasing the price of the product.

The extent to which they can do so depends on the price elasticity of demand for the product.

People will not possibly stop drinking tea because of its price, the worst that can happen is to reduce the amount of tea they drink; when tea becomes more expensive