How does tax affect equilibrium price and quality?

Question

How does tax affect equilibrium price and quality?

Answer 1

Higher tax increases equilibrium price and reduces equilibrium quantity (and increases deadweight loss, thus total surplus falls).

Tax reduction decreases equilibrium price and rises equilibrium quantity (and decreases deadweight loss, thus total surplus is higher).

http://www.econmodel.com/classic/terms/s...

http://www.heritage.org/Research/Taxes/i...