3. If the government imposes a tax on the production of a good or service, what will happen to the equilibrium price
and quantity of the good?
a. Equilibrium price and quantity will both decrease
b. Equilibrium price and quantity will both increase
C. Equilibrium price will increase and equilibrium quantity will decrease
d. Equilibrium price will decrease and equilibrium quantity will increase
The correct answer to the following question will be Option C.
Explanation:
Equilibrium price will rise while volume will indeed fall if analysts or economists find a commodity to be "natural", a rise in disposable income would result in something like a decline in demand and sale for the product.
Like the demand for a strong increase, the quantity began demanding for the provided product should then be that according to the quantity needed.
Other available scenarios have no connection with the particular circumstance. So choice C seems to be the perfect solution to that.
