If a tax shifts the supply curve downward,
A)we cannot infer anything because the shift described is not consistent with a tax.
B)we can infer that the tax was levied on sellers of the good.
C)we can infer that the tax was levied on both buyers and sellers of the good.
D)we can infer that the tax was levied on buyers of the good.

Question

Quizplus · Accepted Answer

A tax on a good typically shifts the supply curve upward (or to the left), indicating a decrease in supply at any given price because the cost of production increases for sellers. A downward shift would suggest a decrease in costs or an increase in supply, which is not consistent with the imposition of a tax.

If a Tax Shifts the Supply Curve Downward