When a Tax Is Levied on Buyers of a Good

question 98

Multiple Choice

When a tax is levied on buyers of a good,

• A)government collects too little revenue to justify the tax if the equilibrium quantity of the good decreases as a result of the tax.
• B)there is an increase in the quantity of the good supplied.
• C)a wedge is placed between the price buyers pay and the price sellers effectively receive.
• D)the effective price to buyers decreases because the demand curve shifts leftward.

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Definitions:

Equity

The principle of fairness and justice in the legal system, often compared to and different from strict legal rules or statutes.

Clean Hands

A legal doctrine that requires a party seeking equitable relief to have acted fairly and without fraud or deceit in relation to the matter before the court.

Equitable Remedies

Remedies granted by courts in situations where monetary damages are insufficient, including injunctions or specific performance.

Specific Performance

An equitable remedy requiring exactly the performance that was specified in a contract. Usually granted only when money damages would be an inadequate remedy and the subject matter of the contract is unique, for example, real property.