The Graph Shown Demonstrates a Tax on Sellers

question 41

Multiple Choice

The graph shown demonstrates a tax on sellers. Which of the following can be said about the effect of this tax?

• A) The price paid by buyers is greater than that received by sellers, and the difference is the tax wedge.
• B) The price paid by buyers is less than that received by sellers, and the difference is the total tax revenue.
• C) The price paid by buyers is greater than that received by sellers, and the difference is the total tax revenue.
• D) The price paid by buyers and received by sellers is higher than it was before the tax was imposed.

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