What is the effect of the imposition of a sales tax?
A)The supply curve will shift to the left.
B)The supply curve will shift to the right.
C)The demand curve will shift to the left.
D)The demand curve will shift to the right.

Question

Quizplus · Accepted Answer

Imposition of a sales tax increases the cost of production for producers, which reduces the quantity supplied. As a result, the supply curve shifts to the left. It is not likely to affect the demand curve. Therefore, Choice A is the best option.

What Is the Effect of the Imposition of a Sales