An increase in business taxes causes the supply curve to shift left.

Question

Quizplus · Accepted Answer

An increase in business taxes causes an increase in the cost of production for businesses, which leads to a decrease in profitability and a decrease in the quantity of goods and services supplied. This shift in supply curve to the left means that at each price level, the quantity supplied will be lower, leading to a decrease in the equilibrium quantity and an increase in the equilibrium price.

An Increase in Business Taxes Causes the Supply Curve to Shift