A tax of $1 on each unit a producer sells will
A) shift supply to the right.
B) increase quantity demanded.
C) shift supply to the left.
D) increase quantity supplied.
E) decrease demand.

Question

Quizplus · Accepted Answer

A tax on each unit of a producer's sale increases the cost of production. This results in a decrease in supply, as producers will only be willing to supply less at each price level. Thus, a tax will shift supply to the left.

A Tax of $1 on Each Unit a Producer Sells