When a Tax Is Imposed on Some Good,what Tends to Happen

question 116

Multiple Choice

When a tax is imposed on some good,what tends to happen to consumer prices and producer prices?

• A) Consumer prices decrease and producer prices increase.
• B) Consumer prices increase and producer prices decrease.
• C) Consumer prices increase and producer prices increase.
• D) Consumer prices decrease and producer prices decrease.
• E) Consumer prices and producer prices converge at the same point.

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Definitions:

Output Contract

A legal agreement in which a seller agrees to sell all the production to a particular buyer, who in turn agrees to purchase the entire output.

Needs Contract

A contract or agreement tailored to address and fulfill specific needs of the parties involved.

Good Faith

Acting with honest intentions without seeking to take unfair advantage in a transaction or situation.

Rule Of Requirements

A principle in contract law that dictates a seller must supply only the quantity of goods that a buyer requires, no less and no more.