Refer to the accompanying graph. If a tax is placed on a good and all else is held constant, we would assume that the supply curve would:

Question

Quizplus · Accepted Answer

When a tax is placed on a good, the cost of production increases for the producers, causing the supply curve to shift leftward (upward) to a new position. This is because producers would have to charge a higher price to cover the additional costs, reducing the quantity of the good supplied at any given price. In this case, the supply curve shifts from S₁ to S₂. Therefore, the correct answer is (C) shift from S₁ to S₂.

Refer to the Accompanying Graph