Which of the following statements is true?
A)A tax assessed on producers shifts up supply.
B)A specific tax assessed on producers does not affect consumers.
C)A tax assessed on producers shifts down supply.
D)An ad valorem tax assessed on producers does not affect consumers
E)A tax assessed on producers shifts both the supply and demand curves.

Question

Quizplus · Accepted Answer

A tax assessed on producers increases the cost of production, causing a decrease in supply. This shift causes the supply curve to shift up and to the left, resulting in a decrease in the quantity supplied at any given price. This shift in supply also results in an increase in price, which is ultimately passed on to consumers. Therefore, statement A is the only true option.

Which of the Following Statements Is True