If the government imposes a pollution tax on gasoline refineries:

Question

Quizplus · Accepted Answer

When the government imposes a pollution tax on gasoline refineries, the cost of producing gasoline increases. As a result, the supply of gasoline will shift to the left, meaning that there will be less gasoline available at every price level. This is because refineries will produce less gasoline since they will factor in the pollution tax in their cost of production. The demand for gasoline is unlikely to be impacted significantly, as gasoline is a necessary commodity for transportation and is inelastic in the short-run.

If the Government Imposes a Pollution Tax on Gasoline Refineries