A government-imposed tax on soft drinks would shift the supply curve for soft drinks to the left,________ the equilibrium price and ________ the equilibrium quantity.
A)increasing; increasing
B)increasing; decreasing
C)decreasing; increasing
D)decreasing; decreasing

Question

Quizplus · Accepted Answer

A tax on soft drinks would increase the production cost for producers, leading to a leftward shift in the supply curve. This would result in a higher equilibrium price and a lower equilibrium quantity, as consumers would be less willing and able to purchase the same quantity of soft drinks at a higher price. Therefore, option B is correct.

A Government-Imposed Tax on Soft Drinks Would Shift the Supply