When a sales tax of 20¢ per soda is imposed on soda consumption,the supply curve for soda shifts down by precisely 20¢ per soda.

Question

Quizplus · Accepted Answer

The imposition of a sales tax does not affect the supply curve for soda. It only affects the demand curve, which shifts downward. The price paid by consumers increases as a result of the tax, but the price received by producers (i.e. the supply curve) does not change.

When a Sales Tax of 20¢ Per Soda Is Imposed