When a Tax Is Imposed on Consumers the Demand Curve

question 119

Multiple Choice

When a tax is imposed on consumers the demand curve will:

• A) shift downward by the amount of the tax.
• B) shift upward by the amount of the tax.
• C) shift downward by less than the amount of the tax.
• D) not shift since sellers collect per-unit taxes.

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Definitions:

Customer Discount

A reduction in the price offered to customers, often as an incentive for early payment or as part of promotional efforts.

Sales Tax

A tax imposed by governments on the sale of goods and services, collected by the retailer at the point of purchase.

Sales Discount

From the seller’s perspective, a discount that a seller may offer the buyer for early payment.

FOB Shipping Point

A term used in shipping agreements indicating that the buyer is responsible for the cost and liability of goods during transportation once they are shipped.