Subsidies and Taxes: Economic Impacts

How do taxes on goods generally affect the market equilibrium price?

• The price decreases.

• The price increases.

• The price remains the same.

• The price first increases, then decreases.

What is the effect of a tax on the quantity of a good sold in the market?

• The quantity increases.

• The quantity decreases.

• The quantity remains unchanged.

• The quantity first decreases, then increases.

When a tax is imposed on a good, how does it affect the supply curve?

• It shifts to the left.

• It shifts to the right.

• It remains unchanged.

• It becomes perfectly inelastic.

What is the term for the additional revenue the government earns from imposing a tax on a good or service?

• Subsidy revenue.

• Tax burden.

• Tax revenue.

• Fiscal deficit.

Who primarily bears the burden of a tax on a good when the demand is highly inelastic?

• The government.

• The consumers.

• The producers.

• Foreign markets.