The effects of a tax a tax places a wedge between the price buyers pay and the price sellers receive Because of this tax wedge, the quantity sold falls below the level that would be sold without a tax The size of the market for that good shrinksThe Effects of a Tax • A tax places a wedge between the price buyers pay and the price sellers receive. • Because of this tax wedge, the quantity sold falls below the level that would be sold without a tax. • The size of the market for that good shrinks