If a tax is imposed on new electric cars and is collected from producers, the:
A)demand curve will shift downward by the amount of the tax.
B)supply curve will shift upward by the amount of the tax.
C)supply curve will shift downward by the amount of the tax.
D)demand curve will shift upward by the amount of the tax.

Question

Quizplus · Accepted Answer

When a tax is imposed on electric car producers, their costs of production will increase, causing a decrease in the supply of electric cars. This will shift the supply curve upward by the amount of the tax. The demand curve will remain the same because the tax is not directly affecting consumers' willingness to buy electric cars. Therefore, the best choice is B.

If a Tax Is Imposed on New Electric Cars and Is