If there is an excise tax collected by suppliers of a particular product, when we draw the graph of supply and demand we would normally represent the excise tax by:
A)a horizontal shift of the supply curve to the left by the amount of the excise tax.
B)a horizontal shift of the supply curve to the right by the amount of the excise tax.
C)a vertical shift up of the demand curve by the amount of the excise tax.
D)a vertical shift up of the supply curve by the amount of the excise tax.

Question

Quizplus · Accepted Answer

An excise tax on suppliers effectively increases the cost of producing or supplying each unit of the product. This is represented on a supply and demand graph as a vertical shift up of the supply curve by the amount of the excise tax, indicating that at every quantity, the price must be higher to cover the tax.

If There Is an Excise Tax Collected by Suppliers of a Particular