Assume that in an effort to help consumers,the government decides to reduce the amount of taxes it imposes on sellers of gasoline,that is,sellers are required to pay the government a smaller fee for each gallon of gas they sell.In the market for gas,this would have the effect of causing an increase in the supply of gas and a decrease in equilibrium price.

Question

Quizplus · Accepted Answer

When the government reduces taxes on sellers of gasoline, it lowers the cost for them to produce and sell gasoline. This causes an increase in supply because sellers are now willing and able to supply more at any given price. As a result, the equilibrium price will decrease as the market adjusts to the new supply-demand balance.

Assume That in an Effort to Help Consumers,the Government Decides