Refer to the accompanying graph.If a tax is placed on a good and all else is held constant,we would assume that the supply curve would:

Question

Quizplus · Accepted Answer

When a tax is placed on a good, the cost of producing the good increases, reducing the profitability of producing it. As a result, producers supply less of the good at every price level, shifting the supply curve to the left. Therefore, the supply curve would shift from S1 to S2 (assuming S3 is an arbitrary line).

Refer to the Accompanying Graph