Consider the graph shown.What would most likely be the cause of a shift from S1 to S2?

Question

Quizplus · Accepted Answer

A tax on sellers would increase their marginal costs, resulting in a shift of the supply curve to the left (from S1 to S2), causing equilibrium price to increase and equilibrium quantity to decrease. A tax on buyers, on the other hand, would decrease the quantity demanded, resulting in a shift of the demand curve to the left. A subsidy for sellers would decrease their marginal costs, shifting the supply curve to the right (from S1 to S3), resulting in an increase in equilibrium quantity and decrease in equilibrium price. A subsidy for buyers would increase their demand, causing a shift of the demand curve to the right.

Consider the Graph Shown