How Would the Elimination of a Sales Tax Affect the Market

question 119

Multiple Choice

How would the elimination of a sales tax affect the market for a product that had been subject to the tax?

• A)The demand for the product would rise and the equilibrium price would fall by the amount of the tax.
• B)The equilibrium price for the product would fall by less than the amount of the tax.
• C)The reduction in government revenue from the tax would be made up by an increase in property taxes.
• D)The supply of the product would become more elastic.

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