When a tax is imposed, it decreases both consumer and producer surplus.
False
True
True
When a tax is imposed, it typically leads to a decrease in both consumer surplus and producer surplus. Consumer surplus decreases because consumers pay a higher price for the good or service due to the tax, while producer surplus decreases because producers receive a lower effective price after the tax is deducted. Overall, the imposition of a tax creates a deadweight loss in the market, reducing the total welfare.