If a tax is levied on the sellers of a product, the demand curve:

• A. Shifts to the left in an amount equal to the tax
• B. Shifts to the right in an amount equal to the tax
• C. Does not change
• D. Is inelastic

Answer: (C)

Verified step by step guidance

1. Understand the concept of tax incidence: When a tax is levied on sellers, it affects the supply side of the market rather than the demand side.
2. Recall that the demand curve represents the relationship between the price of a good and the quantity demanded by consumers. A tax on sellers does not directly affect consumers' willingness to buy at different prices.
3. Recognize that a tax on sellers typically causes the supply curve to shift to the left, as it increases the cost of selling the product, leading to a decrease in supply at each price level.
4. Since the tax is on sellers, the demand curve remains unchanged because the consumers' preferences and income are not directly affected by the tax.
5. Conclude that the correct answer is that the demand curve does not change when a tax is levied on sellers, as the tax affects the supply side of the market.