Currently, 100,000 units of a good are traded on the market. The government imposes a tax on producers that raises the unit cost of production of the good. This will:
A)shift the supply curve to the left.
B)shift the supply curve to the right.
C)shift the demand curve to the left.
D)increase the quantity traded.

Question

Quizplus · Accepted Answer

The tax will increase the cost of production for producers, which will result in a decrease in the supply of the good. This will shift the supply curve to the left, leading to a decrease in the quantity traded. The tax on producers will raise their costs of production, leading to a decrease in supply as producers will not be willing to supply as much at a higher cost. This will shift the supply curve to the left.

Currently, 100,000 Units of a Good Are Traded on the Market