Suppose there is currently a tax of $50 per ticket on airline tickets.Sellers of airline tickets are required to pay the tax to the government.If the tax is reduced from $50 per ticket to $30 per ticket,then the

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When the tax on airline tickets is reduced, the cost of production for sellers decreases by the amount of the tax reduction (in this case, $20 per ticket). This means that the supply curve will shift downward by $20, as sellers are now willing to sell the same quantity of tickets for a lower price. However, the demand curve will not shift, as the tax reduction does not directly affect the preferences or willingness to pay of buyers. As a result, the price paid by buyers will decrease by less than $20, because sellers will still aim to make a profit and may not pass on the full savings from the tax reduction to buyers.

Suppose There Is Currently a Tax of $50 Per Ticket