With a downward sloping demand curve and an upward sloping supply curve for a product, placing an excise tax on this product will:

Question

Quizplus · Accepted Answer

An excise tax is a tax on a specific good, and it is typically added to the price of the product. In this scenario, the tax will increase the cost of production for the supplier, causing the supply curve to shift to the left. This will decrease equilibrium quantity and increase equilibrium price, leading to a new equilibrium point with a higher price and lower quantity. Therefore, choice D is correct.

With a Downward Sloping Demand Curve and an Upward Sloping