If a tax is imposed on a good that is already underproduced, what is the most likely outcome in terms of market efficiency?

When a tax is imposed on a good that is already underproduced, it usually makes the situation worse in terms of market efficiency. Underproduction means that the good is not being made or sold enough to meet demand, which can lead to consumers wanting more than what is available. Adding a tax increases the cost for producers, which can cause them to produce even less of the good. For example, if a small bakery makes only a few loaves of bread each day and a tax is added, they might decide to reduce their production further because they cannot afford the tax, leaving customers with even fewer loaves. This leads to less overall satisfaction in the market and reduces efficiency because fewer people are getting the goods they want.