Use the figure below to answer the following question(s).
Figure 4-8

-Refer to Figure 4-8.The supply curve S₁ and the demand curve D indicate initial conditions in the market for soft coal.A $40-per-ton tax on soft coal is levied,shifting the supply curve from S₁ to S₂.Imposing the tax increases the equilibrium price of soft coal from
A)$20 to $60 per ton.
B)$20 to $50 per ton.
C)$50 to $60 per ton.
D)$50 to $90 per ton.

Question

Use the figure below to answer the following question(s).
Figure 4-8
 
-Refer to Figure 4-8.The supply curve S₁ and the demand curve D indicate initial conditions in the market for soft coal.A $40-per-ton tax on soft coal is levied,shifting the supply curve from S₁ to S₂.Imposing the tax increases the equilibrium price of soft coal from
A)$20 to $60 per ton. 
B)$20 to $50 per ton. 
C)$50 to $60 per ton. 
D)$50 to $90 per ton.

Quizplus · Accepted Answer

The tax increases the cost of production, shifting the supply curve to the left. The new equilibrium is at a higher price and lower quantity.

Use the Figure Below to Answer the Following Question(s)