When a Tax Is Imposed on Sellers of a Good

question 89

Essay

When a tax is imposed on sellers of a good, the resulting rise in the equilibrium price is usually less than the amount of the tax itself. Why doesn't the equilibrium price rise by the full amount of the tax?

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Definitions:

Property Rights

Legal rights that dictate the ownership and utilization of property, including the rights to sell, lease, occupy, or develop the owned property.

Individual Rights

The liberties and rights guaranteed to each person, often protected under law or constitution.

Industrial Relations System

A conceptual framework concerning the structure and processes involved in the employment relationship, including the interactions among employers, employees, and their representatives.

Worker Rights

The legal, moral, and social entitlements that relate to individuals' conditions and treatment in their place of employment.