Refer to the accompanying graph. If a tax is placed on a good and all else is held constant, we would assume that the supply curve would

Question

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When a tax is placed on a good, the cost of producing the good increases, which means that suppliers will need to receive a higher price to cover their costs. This will cause the supply curve to shift upwards, from S₁ to S₂. The new equilibrium price will be higher than the original price, and the new quantity supplied will be lower than the original quantity supplied.

Refer to the Accompanying Graph