If there was an increase in the excise tax on beer, what would be the effect on the equilibrium price and quantity of beer?
A) price increases, quantity decreases
B) price decreases, quantity decreases
C) price increases, quantity increases
D) price decreases, quantity increases

Question

Quizplus · Accepted Answer

An increase in the excise tax would increase the cost of production for the beer manufacturers, thereby shifting the supply curve to the left. This would result in a higher equilibrium price and a lower quantity of beer consumed. Therefore, option A is correct.

If There Was an Increase in the Excise Tax on Beer