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

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When a tax is placed on a good, the cost of production increases for the producers, and this is likely to cause a shift in the supply curve. In this case, we would expect the supply curve to shift from S₁ to S₂ because the new equilibrium price (P2) must be higher than the original equilibrium price (P1) to compensate for the increase in production cost.

Refer to the Accompanying Graph