Exhibit 19-2 Refer to Exhibit 19-2. The market for good X is initially in equilibrium at $5. The government then places a tax on the producers of good X, taxing them on each unit of good X they sell. As a result, the supply curve A)shifts (down and)rightward from S₂ to S₁. B)shifts (up and)leftward from S₁ to S₂. C)does not shift from S₁. D)There is not enough information to answer the question.

Question

Quizplus · Accepted Answer

When the tax is imposed on producers, the cost of production increases and the supply decreases. This leads to an upward/leftward shift of the supply curve from its initial position, resulting in a new equilibrium point at a higher price and lower quantity, represented by the intersection of the new supply curve (S₂) with the initial demand curve (DD1).

Exhibit 19-2 ​ Refer to Exhibit 19-2. the Market for Good X Is

Exhibit 19-2 Refer to Exhibit 19-2. the Market for Good X Is