The imposition of a tax on a good or service would be represented as
A)an increase in demand.
B)an increase in supply.
C)a decrease in demand.
D)a decrease in supply.
E)a decrease in demand and in supply.

Question

Quizplus · Accepted Answer

When a tax is imposed on a good or service, it increases the cost of production for suppliers, which ultimately leads to a decrease in the supply of the good or service. Therefore, the correct choice is D, a decrease in supply.

The Imposition of a Tax on a Good or Service