A tax that the government collects from the producers of a good:
A)shifts the supply curve upward.
B)decreases tax revenue for the government.
C)shifts the demand curve downward.
D)shifts the demand curve upward.

Question

Quizplus · Accepted Answer

A tax on producers will increase the cost of producing the good, leading to a lower quantity supplied at each price. This will shift the supply curve upward to reflect the higher cost of production. As a result, the equilibrium price will rise, but the quantity demanded will fall.

A Tax That the Government Collects from the Producers of a Good