Exhibit 19-2 -Refer to Exhibit 19-2. The market for good X is initially in equilibrium at $5. The government then places a per-unit tax on good X, as shown by the shift of S₁ to S₂. As a result, the equilibrium price A)rises from $5.00 to $6.25. B)falls from $5.00 to $4.00. C)remains constant at $5.00. D)none of the above

Question

Quizplus · Accepted Answer

A per-unit tax on a good typically causes the supply curve to shift upwards or to the left, leading to an increase in the equilibrium price as the market adjusts to the new cost of production.

Exhibit 19-2 ​

Exhibit 19-2