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Assuming That the Government Imposes an Excise Tax on Cars

Question 44

Multiple Choice

Assuming that the government imposes an excise tax on cars equal to $1000 per automobile, the supply of automobiles will shift:


A) to the right and the price of automobiles will change by an undeterminant amount.
B) to the left and the price of automobiles will increase by $1000.
C) to the left and the price of automobiles will increase by less than $1000.
D) to the right and the price of automobiles will increase by more than $1000.

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