In a market where a good is underproduced, how would the imposition of a tax most likely affect overall efficiency and production levels?

When a good is underproduced, it means that the supply is lower than what people want or need, often leading to higher prices and less access. Imposing a tax on this good would likely make it even more expensive for consumers, which could reduce demand further and discourage producers from making more of it. This means that overall efficiency in the market could decrease because fewer people would be able to buy the good, and producers would have less incentive to increase production. For example, if a small town has a limited supply of fresh vegetables and a tax is added to them, the price might rise, causing people to buy less and farmers to grow even fewer vegetables. Ultimately, the tax would likely worsen the situation of underproduction and reduce overall welfare in the market.