When the government imposes a per-unit tax on a product that has a downward-sloping demand curve and an upward-sloping supply curve,the price producers actually receive for the product
A) increases by the amount of the per-unit tax.
B) increases by less than the amount of the per-unit tax.
C) decreases by the amount of the per-unit tax.
D) decreases by less than the amount of the per-unit tax.
E) remains unchanged.

Question

Quizplus · Accepted Answer

When a per-unit tax is imposed, the supply curve shifts upward by the amount of the tax. The price producers receive decreases, but by less than the full amount of the tax, as part of the tax burden is shared with consumers.

When the Government Imposes a Per-Unit Tax on a Product