When a sales tax is imposed on sellers,the supply curve shifts so that the vertical distance between the original supply curve and supply plus tax curve equals the
A)sales tax multiplied by the price elasticity of demand.
B)sales tax multiplied by the price elasticity of supply.
C)sales tax divided by the price elasticity of demand.
D)amount of the sales tax per unit.
E)sales tax divided by the price elasticity of supply.

Question

Quizplus · Accepted Answer

The vertical distance between the original supply curve and the supply plus tax curve equals the amount of the sales tax per unit. This is because the tax directly increases the cost of supplying each unit by the amount of the tax, shifting the supply curve vertically upwards by this amount.

When a Sales Tax Is Imposed on Sellers,the Supply Curve