Per-unit taxes have which effect on the equilibrium price of a good?
A) They cause demand curves to shift downward, thus lowering price.
B) They cause demand curves to shift downward, thus raising price.
C) They cause supply curves to shift downward, thus lowering price.
D) They cause supply curves to shift upward, thus lowering price.
E) They cause supply curves to shift upward, thus raising price.

Question

Quizplus · Accepted Answer

Per-unit taxes on goods cause the supply curve to shift upward, as the cost of production increases for suppliers. This shift results in a higher equilibrium price for the good, as suppliers need to charge more to cover the additional tax expense.

Per-Unit Taxes Have Which Effect on the Equilibrium Price of a Good