This graph depicts a tax being imposed,causing demand to shift from D₁ to D₂.According to the graph shown,the tax caused:

Question

Quizplus · Accepted Answer

A tax on a good or service increases its price, which leads to a decrease in demand. In this scenario, the tax caused a shift in the demand curve from D₁ to D₂. As a result, the equilibrium quantity decreased from Q₂ to Q₁. Therefore, the correct answer is B, a decrease in consumption from Q₂ to Q₁. Choices A, C, and D are incorrect, as they do not align with the changes that occur due to the imposition of a tax.

This Graph Depicts a Tax Being Imposed,causing Demand to Shift