What effect will a tax of $0.10 per bar on sellers of Caramelt candy bars have

Question

Quizplus · Accepted Answer

A tax on sellers of Caramelt candy bars will increase the cost of production, which will lead to a decrease in supply because some sellers will drop out of the market. As a result, the supply curve will shift up by $0.10, meaning that at each price point, sellers will supply 10 cents less than they did before the tax. This will push up the equilibrium price and reduce the equilibrium quantity sold, assuming that the demand curve remains unchanged.

What Effect Will a Tax of $0