An increase in a per unit production tax ______ supply.
A) increases
B) decreases
C) does not change
D) changes in an indeterminate direction

Question

Quizplus · Accepted Answer

When there is an increase in per unit production tax, the cost of production increases and hence suppliers are discouraged from producing and supplying the goods/services, thus decreasing the overall supply of the goods/services.

An Increase in a Per Unit Production Tax ______ Supply