In: Economics
Suppose that the government was taxing consumers of widgets by $3 per unit. Now it repeals the tax on consumers and replaces it with a $3 per unit tax on producers. What will happen to the price of widgets?
a. The price will rise by $3
b. The price will rise, but by less than $3
c. The price will be unchanged
d. The price will fall, but by less than $3
e. The price will fall by $3